Bonds vs Stocks
Every person has to make some investment choices. In the investment arena, two frequently used terms are stocks and bonds. A lot of people invest their money through stocks and bonds. The whole point of investing your money with some company is to multiply it. But do you know how stocks and bonds function and how exactly you get profits? There are certain marked differences between the two. We'll enlighten you on these in this article.
Bonds deal with loaning your money to an organization such as a company or the government. They pay you interest on your loan. So in a since the bond is a loan.
A bonds value is directly determined on the value of its interest rate. This rate is determined from the economy and value of the open market. If a bonds interest rate goes up then the bond is worth more for face value. If the bond's interest rate goes down then bond is sold at a lower face value.
Most investors are used to a higher rate of interest than what the bond pays. The bond is sold at a low value to offset the gap. The OTC market is the best place for trading in bonds. You can buy corporate bonds from stockbrokers too.
Stocks are investments that can be small, large, or mid cap. Stocks are part of the company itself and by buying a stock you are investing in that company.
Stocks have a lot more risk than bonds. This is because you are investing in the company not in a specific economy as a whole. If a company is doing well then the value of the stock will increase and likewise if a company is doing poorly then its stock value will decrease. - 23223
Bonds deal with loaning your money to an organization such as a company or the government. They pay you interest on your loan. So in a since the bond is a loan.
A bonds value is directly determined on the value of its interest rate. This rate is determined from the economy and value of the open market. If a bonds interest rate goes up then the bond is worth more for face value. If the bond's interest rate goes down then bond is sold at a lower face value.
Most investors are used to a higher rate of interest than what the bond pays. The bond is sold at a low value to offset the gap. The OTC market is the best place for trading in bonds. You can buy corporate bonds from stockbrokers too.
Stocks are investments that can be small, large, or mid cap. Stocks are part of the company itself and by buying a stock you are investing in that company.
Stocks have a lot more risk than bonds. This is because you are investing in the company not in a specific economy as a whole. If a company is doing well then the value of the stock will increase and likewise if a company is doing poorly then its stock value will decrease. - 23223
posted by X - Men @ 1:38 AM
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