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Stocks and Bonds
If you are, an investment in stock or bonds may be an option. Please keep in mind, as with all investments the greater potential for return the higher the risk you assume. An investment in common stock usually entitles the owner the right to vote at shareholder meetings and to receive any dividends that are declared by the company. Conversely, a purchase of bonds issued by a corporation, government, or municipality provides the investor a certificate or bond that states a specific interest rate will be paid and when the loaned funds will be returned to the investor. Brokerage accounts allow various investment vehicles to be housed in one account. In addition to mutual funds, brokerage accounts can hold stock, which entitle the shareholder ownership of a corporation represented by the number of shares that are a claim on the corporation's earnings and assets. This ownership gives the shareholder certain rights, including voting on important matters before the company and participating in the profits if the company distributes dividends. When you own stock, you participate in the growth of the company. As the value of the company increases, so does your investment. If profits increase, you may receive bigger dividend checks. A possible risk for stockholders is that although there is the potential for gain, there is also equal potential for loss. Another vehicle which can be purchased and held in a brokerage account are bonds. Bonds are interest-bearing debt securities which obligate the issuer to pay the bondholder a specified sum of money, usually at specific intervals, and to repay the principal amount of the loan at maturity. Bondholders have an IOU from the issuer, but no corporate ownership privileges, as stockholders do. The primary advantage as a creditor is a higher claim on assets than that of stockholders. A disadvantage is that bondholders do not share in the profits if a company should do well. They are only entitled to the original principal plus interest. Generally, there is less risk in owning bonds compared to owning stocks, but this comes at the cost of a lower return. Jerry Clark, Milford Federal’s Financial Consultant, can help you learn more about the factors below that play a role in determining the value of stocks or bonds and the extent to which it fits into your investment portfolio.
You should carefully consider your investment objectives and your risk tolerance before investing. The performance of these investments will, in fact, fluctuate with market conditions. The above information is provided to you for informational purposes only. This does not constitute a recommendation and should not be construed as investment advice for which you should speak with a qualified financial consultant.
offered through Private Ledger Insurance Services of Massachusetts, Inc., & its affiliates. NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE NOT A DEPOSIT • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
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Are you looking for ways to invest your hard-earned money with the potential to earn higher returns?
