Stocks and bonds


Stocks and bonds are two popular ways of investing money. A bond is a certificate stating that you are owed money. When you buy a bond, you buy a debt, and thus become a lender. Most bonds, whether short or long term, work on this principle and are typically regarded as a stable, low-risk investment. One common type of bond is a U.S. Savings Bond, which can be bought at most banks for half of its face value. For instance, a fifty dollar savings bond will cost twenty-five dollars. Depending on the terms of the bond and market value, your bond will reach maturity sometime in the future when it can be redeemed for its full value. A stock is a unit of ownership in a corporation. Stocks are a riskier investment, but they can sometimes be more profitable than bond investments. Stocks in established companies such as utilities, and Fortune Five Hundered companies tend to grow at a slow, steady rate and are considered by many to be a conservative investment. New growth companies and I.P.O.’s or initial public offerings may deliver high returns, but can be risky. For more information on stocks and bonds, contact your bank or financial advisor.

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