Investing in long-term financial vehicles give you the most gains but it also puts your funds at greater risk. There is much truth to the saying, "there is no gain if there is no risk". Still you can reduce your chances of losing your hard earned money, by researching and taking time to understand what you are buying. Would you purchase a house you've only just seen on the outside? Both of these are serious investments and you need to arm yourself with the basic knowledge about the subjects.
So what are the differences you need to consider when investing in bonds, stocks or mutual funds?
What are bonds? When you are investing funds in bonds, you are technically lending your money to a borrower. Who can this be? Some of these are the U.S. government, a state, a local municipality or a big company like General Motors. All these institutions need money to expand, to fund a federal deficit or to finance new ventures. So they borrow funds by issuing bonds. The price you pay for a bond is know as its' face value. The issuer promises to pay you back in a particular day, at a fixed rate of interest stated on the coupon itself. You are safely investing in bonds; these bonds give you a yearly income until the maturity date. When the bond matures, the borrower pays you back the principal plus interest. In most cases, investing in bonds is a minimal-risk free decision.
What about stocks? A share of stock is a certificate of ownership purchased by individuals who are investing or buying a proportional share of the business. The more stocks you buy, the bigger the share of profits you will get and the bigger your financial stake becomes. A stock's value is affected by the financial situation of the company. Historical trends in stocks have shown that their value rises over time, although there are no sure guarantees. Also with stocks the only assured return is if it appreciates on the open market. And while it is true that there are companies that give their stockholders dividends, they are not obligated to do so.
What are mutual funds? In this financial scenario, you join a group of investors in investing your funds to buy stocks, bonds, or anything else your fund manager decides is worthwhile. If you do sustain losses, these losses are subtracted from the fund's capital gains before the money is distributed to you the shareholder. The fund won't pass out capital gains to shareholders until it has at least earned more in profits than it had lost.
Remember it pays to do research before investing.
Timothy Gorman is a successful Webmaster and publisher of Debt-Relief-Solutions.com. He provides more debt relief, consolidation and financial planning advice that you can research in your pajamas on his website.
disinfecting cleaning services Winnetka ..It's about time someone spoke the truth concerning outsourcing. The... Read More
The stock market is very unstable at this time going... Read More
Let's hope you did not have any of the Enron... Read More
Yesterday I received my monthly issue of MONEY magazine. This... Read More
How do you make money without picking tops and bottoms?I... Read More
Everybody is riding the Wall Street Roller coaster. Even if... Read More
It looks like the market is ready to start up... Read More
What the heck am I talking about?It is often said... Read More
I mean it when I say that. While plastic silverware... Read More
Time to look back2004 is over, now we are in... Read More
People are constantly asking me why is the stock market... Read More
One of the basic laws of physics is that a... Read More
Both the stock market and oil prices rallied recently, which... Read More
What is the Series 7 Exam? If you... Read More
What does it mean to short a stock?This means that... Read More
Sometime in the third quarter of 1997, someone told me... Read More
Who are the successful investors?There are those who follow the... Read More
Four blind men were asked to give a description of... Read More
The ABC's of Stock Trading SuccessStock trading success...why is it... Read More
A PEG ratio cannot be used alone but is a... Read More
There can't be many traders who haven't at least considered... Read More
We are already in it, but you can't see it.... Read More
The stock market has not been very kind to your... Read More
Before they go over the cliff to their destruction these... Read More
I have watched my cat play with a bag of... Read More
last minute cleaning help Highland Park ..After some forty years of banking and investments, I retired... Read More
When it comes to 401k's there is an overabundance of... Read More
In his wonderful book, 'Multiple Streams of Income', best selling... Read More
With an insecure job market, overworked employees, insufficient retirement savings... Read More
Duck! No I don't mean a quack, quack. I meant... Read More
What is leverage?Here is a definition of leverage from an... Read More
Everybody is riding the Wall Street Roller coaster. Even if... Read More
Should the market turn against you, it is important that... Read More
The big bad bear is stirring again. So far he... Read More
Every day I see in the financial section of newspapers... Read More
Now where have I heard that before? I know. It... Read More
Let me start by saying that...Most online brokers do not... Read More
Every year I go to the Money Show in Orlando,... Read More
If you have talked to a stock broker or financial... Read More
For the last few weeks we have seen the stock... Read More
The Shadow knows. Remember him? It seems a shadow has... Read More
Four blind men were asked to give a description of... Read More
It's about time someone spoke the truth concerning outsourcing. The... Read More
If it walks like a duck, quacks like a duck... Read More
Its dinnertime and the phone rings. It's Joe Noname with... Read More
Wouldn't it be nice if you were only in the... Read More
Suppose your position has made a big move and you... Read More
It is wonderful to be alive in the information age.... Read More
Outlined below are some of the advantages and disadvantages of... Read More
Let's assume that you want to make some serious money... Read More
Stocks & Mutual Fund |