The Difference in Stocks and Bonds

Business for already no stranger to deal with stocks and bonds. Both are tools used to obtain fresh funds for additional venture capital that is run. The second letter is also supplied via the stock market or the bond market for investment. Beware wrong, though at first glance it looks the same, but stocks and bonds got a fairly clear distinction from several sides.

The stock was shaped into the form of documents and ownership of a company, which shares. Stock owners have the right to acquire a portion of the profits of the company. The higher the stake you have in a company, the more profit you get.

Bonds is far different from stocks, bonds are debt affidavits. The company will issue this letter as a sign of debt and have no rights of ownership of the company. Period of ownership also is not limited to, because it can be sold back to remove stock ownership.

The Difference Stocks and Bonds

To further strengthen, here some differences of stocks and bonds that were already public and will make you easier to recognize where the stock, and where the bonds.

1. The agency that issued the stocks issued by the company: Open while bonds issued by the Government
2. Profit sharing: shares are dividend, that is taken from the net profit of the company. Bonds provide an advantage in the form of principal and interest rates
3. Duration: the stock has no time limit for the company still stands, while bonds have had a period of payment
4. Obligation to pay: for stocks are required to pay if it gets the profit, but bonds is very compulsory to pay
5. Risk investment: stocks have a greater risk, because the company has risk of loss and at worst bankrupted. In contrast to bonds, the smaller the risk when investing, because the company is obligated to pay and not have to care about the profits of the company
6. Advantage investment: high risk, high reward. If the fortunes of the big companies, it will be directly proportional to the amount you get. Whereas the principle of low risk low reward applies to bonds. The owner of the bonds will only be gets a certain amount of profit in each year
7. If the company went bankrupt: stocks become worthless because the company will only pay a profit, even if there is. While the holders of the bonds will be prioritized to get paid. The remaining assets are used to pay the holder of the bonds.

For investors, stocks and bonds have a vital role to support the smooth running of the business. Those with more money going to pick stocks or bonds for investment. Harappannya will benefit in days later. The profits earned from stock and bond holders are generally larger than bank interest. That's why stock and bond investment into something rising lately. "Brokers" much of the stocks found in the buying and selling of shares. They seek profits by selling when the stock price is low and sell when the stock price goes up again. But for the owners of the bonds will be benefited, because the fixed-gain each year.

If you want a great profit, the stock so the answer. But if you want a secure investment without misgivings with the various risks that haunt, bonds became the answer. Now all the options depending on You to invest money in the form of stocks or bonds.