Stocks Portland MI

When an investor buys a stock, part ownership in the form of a share is bought. If the business or enterprise happens to do well, the investor benefits by seeing an increase in the value of the share. The share can either be held or sold at a profit on the stock exchange. If the business does poorly, the value of the share declines, and the investor may lose some or all of the investment.

Stocks are usually riskier than bonds as there is no guarantee that the stock will do well. However, there is potential to earn higher returns when it comes to stock trading. Companies sell their stock for various reasons, such as developing new products, expanding into new markets, or even paying off debt. 

What is a Bond?

Bonds are a type of investment designed to aid governments and corporations to raise money. It can be viewed as a type of loan. There is no stock ownership and dividends, but investors who purchase bonds do receive payment in the form of interest.

There are two types of bonds, government bonds and corporate bonds. When the government is in need of money, it can only issue bonds. Businesses issue bonds instead of seeking a loan or overdraft from the bank as interest rates are cheaper on bonds and the bond market offers better terms.

Stock vs. Bonds

When bonds and stocks are compared, bonds are considered to be a safer investment. Owning a stock offers more potential for returns, but bonds come with much less downside volatility. By owning a mix of different investments, you’re diversifying your portfolio. Doing so can curb the risks you’d assume by putting all of your money in a single type of investment.

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