A common question to many as to what is the difference or the similarities of the two, but in reality these two are two different things that are against or distinct to one another. The Stock vs Bonds: What separates them?
First of all, as everyone knows, Stocks are your ownership in a company. This ownership is what you invested for and the monetary value that is what you invested is used to further develop a company by pushing forward a campaign plan, executing a marketing strategy or anything that can potentially boost their sales or performance internally and externally. And then, the results are what you can call as the returns that are distributed to shareholders as cash dividends- this is the reward from your investments.
However, it is possible that the reward you expect can be a loss which all depends on the company’s performance.
When corporal bodies need to increase money to fund plans, pending projects and other activities that require financial support, uphold uncompleted processes, or give more financial support to present debts pertaining to other matters, an issuance of bond might be needed more on to shareholders in its place of attaining mortgages from a bank.
So why is the two commonly compared against each other? The thing is it shouldn’t be for these two have two different meanings that have purpose as different as the other one.
It is a strategy however that if you invest on both, the higher the chances of big returns. In that way, it diversifies the number of stocks you uphold and it can assure a satisfying result. Although it is possible that if one fails, the other might fall as well.
Like aforementioned, it is possible that a fall might come. This is the disadvantage when an amount of investment is made, the same amount might be the result as a lost.
Both securities are good but which is better? Again, it shouldn’t be compared for each has their own unique purpose. Both have potentials on to which can pump up your investments that is depending on how you trade, how a company performs and how you perform in the stock market.
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