| Every person has to make some investment | | | | directly if your chosen company does well. But |
| choices. In the investment arena, two frequently | | | | you get a fixed return on your investment. The |
| used terms are stocks and bonds. A lot of people | | | | company's success or failure won't play any part |
| invest their money through stocks and bonds. | | | | in your returns. This return rate is a small fraction |
| The whole point of investing your money with | | | | of the original offer of the bond. This fraction is |
| some company is to multiply it. But do you know | | | | called the coupon rate. |
| how stocks and bonds function and how exactly | | | | Stocks |
| you get profits? There are certain marked | | | | When you buy a stock, you are buying part of |
| differences between the two. We'll enlighten you | | | | the company itself. You become part owner of |
| on these in this article. | | | | the company. Stocks come in small, large and mid |
| Bonds | | | | caps. |
| You must have a picture of a loan. Bonds are | | | | You need to choose stocks meticulously, and |
| very similar. Investing in bonds means that you | | | | take into account the risk factor that comes with |
| are loaning your money to a company, | | | | investing in this market. If you want to play safe, |
| organization, or government of your choice. You | | | | invest in stocks of a tried and tested company |
| get a receipt for your loan from the concerned | | | | rather than a new organization's stocks. |
| body, and you get the interest on your loan in the | | | | Stocks fluctuate in value depending upon how well |
| form of a bond. | | | | the company is doing. The better the company |
| Bonds are bought and sold as any other | | | | does, the higher will its stock prices rise. The |
| commodity in an open market. The values of | | | | reverse is equally true. Stocks can be traded as |
| bonds go up and down depending on the state of | | | | options too, which is a type of futures business. |
| the general economy. The current interest rates | | | | You can buy and sell stocks every day, on the |
| affect and even define the quality of your | | | | Internet, in the comfort of your home. Rise and |
| investment. You may have a bond of one | | | | fall in the stock market affects the value of the |
| thousand dollars. If the annual rate of interest is | | | | share you have purchased. So you should realize |
| 5%, you can sell it at a higher face value if the | | | | that stock trading is by far riskier than investing in |
| market rates of interest are below 5%. And | | | | bonds. |
| supposing the market rate of interest soars | | | | We have drawn you to the heart of the stock |
| above 5%, you can sell it, but at a lower face | | | | versus bond debate. Both are good ways to |
| value. | | | | invest your money, but both have a risk factor |
| Most investors are used to a higher rate of | | | | associated with them. If you can manage your |
| interest than what the bond pays. The bond is | | | | funds well, you have a chance of making excellent |
| sold at a low value to offset the gap. The OTC | | | | money on the market. To become a good |
| market is the best place for trading in bonds. You | | | | investor, you need to put in research, devise a |
| can buy corporate bonds from stockbrokers too. | | | | game plan, and have good guidance from a |
| The stock versus bond debate is an ongoing one. | | | | trusted source. |
| With bonds, unlike stocks, you do not profit | | | | |