Stocks vs Bonds

By Gilbert Stockton

There are a few differences in stocks and bonds. The differences could be a function of how much profit you get from investing in them. Read this article about the investment choices available to you.

A bond is very similar to a loan. A company, organization, or government loans you money to invest in and you gain interest from the loan.

Bonds fluctuate in value based upon the economy of the open market. If the value goes up then you can sell the bond at higher face value. If the market rate decreases then the bond will be sold at lower face value. The interest rates are what determine if the bond is a good investment.

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 fluctuate in value depending upon how well the company is doing. The better the company does, the higher will its stock prices rise. The reverse is equally true. Stocks can be traded as options too, which is a type of futures business. You can buy and sell stocks every day, on the Internet, in the comfort of your home. Rise and fall in the stock market affects the value of the share you have purchased. So you should realize that stock trading is by far riskier than investing in bonds. - 23196

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