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.
custom home cleaning Wilmette ..As one of my regular readers you know I have... Read More
This is a rather simple strategy with which I am... Read More
Exchange Traded Funds (ETFs) are a group of passive index... Read More
I'll bet with almost anyone that has stocks or mutual... Read More
Have you seen all those big full page ads for... Read More
Are hedge funds a suitable investment for you? Hedge funds... Read More
How do you invest? What do you really pay? At... Read More
What can I expect to make my first year of... Read More
Did you know you can make money (and a lot... Read More
I have watched my cat play with a bag of... Read More
I read a comment by a forum member on another... Read More
Several times each month I am solicited by various market... Read More
When you stand on the ocean shore and watch the... Read More
If you have a pension plan at work you will... Read More
There is nothing more exciting than finding an undervalued stock... Read More
Many people would like to diversify their portfolios to expand... Read More
If you've ever flipped on the television to CNN Financial... Read More
Four blind men were asked to give a description of... Read More
In his wonderful book, 'Multiple Streams of Income', best selling... Read More
If you have talked to a stock broker or financial... Read More
Today's society gives special recognition to alcoholics, sexaholics, binge-aholics, shopaholics,... Read More
As GuruFocus updates the stock buys and sells of gurus,... Read More
There are red lights, green lights, blue lights and spot... Read More
Someday you may want to retire and continue to live... Read More
Just about now everyone is confused as to which way... Read More
same day cleaning service Morton Grove ..This is an extract of an article which was first... Read More
Look back over the years and try to remember how... Read More
Well, not really. What I mean is I don't mind... Read More
The Winter Games for the Olympics are coming up soon... Read More
Every stock market investor faces one primal enemy. An enemy... Read More
The following are a list of nine things you want... Read More
There has been great condemnation recently because China has been... Read More
I mean it when I say that. While plastic silverware... Read More
Economists know more about how the fragments of society work... Read More
There are so many kinds of work that needs to... Read More
If you were to find that you had some severe... Read More
Let me start by saying that...Most online brokers do not... Read More
No, this is not a symbol for some Latin number.... Read More
Last time we looked at the real performance of the... Read More
Today we are inundated with tons of information about the... Read More
If you have a pension plan at work you will... Read More
Fundamental analysis.Fundamentals analysis says the best way to predict the... Read More
If you are fed up with early redemption charges and... Read More
It is wonderful to be alive in the information age.... Read More
If you don't know what a Roth IRA is then... Read More
The higher the market goes the more confusing are the... Read More
Have you bought any mutual funds this year or late... Read More
As an investor you will want to check out any... Read More
The Bollinger Band theory is designed to depict the volatility... Read More
A Guide to Using Stop Loss Orders Stop losses are... Read More
Stocks & Mutual Fund |