Stocks and Bonds
How to chose: stocks or bonds? One of the main reason an investor is hesitant about investing, is because it is somewhat unclear of the difference between the two. It can be as confusing as choosing between black and blue, but it doesn’t have to be that difficult. The role of stocks it to provide long-term growth potential, while the role of bonds is to provide an income stream. With all of that, which will be more conducive to your personal investing capabilities: stocks or bonds? When an investor buys shares of stocks, he or she is essentially buying part ownership in a corporation. In that respect the value of a company stocks will reflect the earnings of the firm. However like everything, there are certain risks and rewards that come with the purchase of stocks.
Bonds on the other hand represent loans made by investors to companies and its other entities. For example certain branches of government issue bonds to try and attract capital without giving up their own management. Therefore someone who is in control of bonds or a bondholder, is essential holding an IOU.