Stocks and Bonds are Diversified Investment Options

Investing in stocks and bonds are good idea. Investing in the stock market is somewhat recommended for aggressive investors but as times go by, the investors should have some bonds investments. Before we proceed to this topic, let us find out the difference between stocks and bonds.

Learning how to invest in the stock market is very easy since you can do it now via internet as long as you have an internet connection and a high end mobile device, laptop or computer.

Also, investing in bonds as your long term savings can be easy via myRa from US Department of Treasury or even buying bonds through mutual funds investing and unit investment trust funds. There are different types of bonds. Some are corporate bonds, municipal bonds and government bonds.

Difference Between Stocks and Bonds

The difference between bonds and stocks are “debt” and “equity”. Bonds are debt and stocks are equity ⁽¹⁾ When you buy stocks, you are buying company shares and you will become a partner of the company because you are a stockholder. While on the other hand, bonds are issued to raise funds. Bonds are issued by government and private corporations. Anyone who will purchase bonds are known as “bondholders”.

To make money in stocks you need to wait until the price will increase or wait for the dividends to be release by the company. On the other hand, you can make money in bonds in specific period of time and a specific interest.

Stocks and Bonds are Good Investment Options

Stocks are high risk type of investment while bonds are good for investors who have a low risk tolerance. If you will combine both stocks and bonds, your investment assets are in “balanced portfolio”. In mutual fund, investing in stocks and bonds is easy, just buy mutual funds shares belong to “balanced fund” type.

Citations & References

⁽¹⁾ www.investopedia.com/university/bonds/bonds1.asp

Investing in the stock market is risky but it can give you more profit compare to low risk types of vehicle like bonds. In bond investing, your investment is safe especially if the bonds are issued by the government. So, if you want a balanced portfolio, choose to invest in stocks and bonds.

If you want to know how to invest in the stock market and how to invest in bonds, just leave a comment below. Tell this page to other investors who are looking for examples of diversified investment portfolio.