People invest their money for several different reasons. You may want to save money for retirement, your child’s education, or to own your own home. Regardless of your purpose for investing, you need to understand the basic forms of
Companies sell stock to raise capital, money for growth. When you buy a company’s stock, you are purchasing partial ownership of that company because you now own a percentage of the company’s shares. For example, if a company had 10,000 shares of stock outstanding and you bought 1,000 shares, then you would own 10 percent of the company and be entitled to 10 percent of the company’s assets.
Purchasing stock is a way to invest in a single company. The value of your share(s) rises and falls with the performance of that company. This type of
Mutual funds are a good
When deciding on a mutual fund, you will want to check the fund’s portfolio and understand the objective of the fund. Some mutual funds invest aggressively to earn higher returns for their investors, but these mutual funds are also more risky. You may also think a particular industry, like the medical industry, will grow significantly so you would want a mutual fund that invests accordingly.
A bond is a loan. If you purchase a bond, then the issuer promises to repay you under the agreed upon terms. When a bond matures, the issuer repays the principal amount in full. Some bonds pay interest to the holder, you, at intervals before the bond matures. Bond length differs but is normally ten years or longer.
People buy bonds for various reasons. One benefit of a bond is the interest payments the bond holder receives. Depending on the bond, the bond holder may receive two interest payments per year. These payments are normally larger than dividends the company would pay stockholders.
Stocks, mutual funds, and bonds are only a few of the
The goal of investing is to gain a return on your money. However, if you are in debt, then your paychecks are being consumed by credit card bills, loans, and mortgage payments. Unless you eliminate your debt, you won’t have the necessary funds to begin investing. Debt settlement provides a proven debt-relief method that can reduce debt up to 60 percent. Don’t allow debt to keep you from achieving your financial goals.