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Stocks represent ownership. If the company is successful, you will participate in the future share price appreciation of that company. However, you can also lose all of your investment. The company is under no obligation to repay you for the use of your funds. Bonds are a loan, or a debt obligation to the company. That is, they must pay you back every cent of your investment. Bondholders also get paid back first in the extreme case of bankruptcy as they represent creditors. For this reason, bonds are less risky, but they also have a limited profit potential. Stocks represent ownership, and you can lose the full value of your investment. Bonds represent a loan, and the company is obligated to repay this loan, plus a certain amount of interest. If you are risk-averse and have a short investment horizon (need access to your funds in the next 10 years), buy bonds. If you are risk-friendly and have a longer investment horizon, purchase stocks.On One Hand: Stocks Mean Ownership
On the Other: Bonds Represent Debt
Bottom Line
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by The BoomHound on March 19th, 2010
Right now you better be careful of both,. There is so much book cooking that even a normally reliable corporate bond can be in question. The next few years are not for the investor but for the trader. If you dont get sucked into the biggest charde of the last 80 years you could end up with a relative pile of money compared to eveyone else and then you can pick a choose who you want to.
Th point is, if you are not spending most of your time watching your investments dont expect the guy who is charging you to do it either. He was a asleep at the wheel in 2008 and history says, he will be again
When you buy bonds, are they insured?
by Answerbag Staff on June 1st, 2010
| 1 person likes this
Do you think that government/corporate bonds or bond funds should be dumped now since they went down so much on Friday
by Isaidyes on August 28th, 2010
| 1 person likes this
How do i buy savings bonds in new york?
by Answerbag Staff on May 24th, 2010
| 1 person likes this
What is distressed debt trading?
by Answerbag Staff on April 23rd, 2010
| 1 person likes this
Does anyone know any good material/resources on investing in foreign bonds (Foreign Bond investing for Dummies?)?
by governorhorton on January 3rd, 2008
| 5 people like this
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