Buying bonds and stocks make a worthwhile investment in the long run. However, it’s imperative that one understands how to invest in stocks and bonds and derive benefit from that investment, rather than losing money. Here we’ll tell you how to invest in stocks and bonds.
1. It is important to understand the working of bonds and stocks. The two are different kinds of investments. Possessing stocks of a company implies that you own a part of the company. Bonds don’t give you any ownership rights of the company. Bonds are debt instruments that the company is obliged to honor.
2. You should also be aware of how bonds and stocks help you making money. In case of stocks, only when the performance of the company is good, you also make money and the worth of your stocks tends to go up. But mind you, stock prices are considerably volatile. On possessing bonds of a company you get paid interest on your investment and definite predefined periods of time and you get your investment back on maturity of that bond. However, volatility in this case is not much.
3. Before making investment in any company, you must research the same. You can find a number of online sources for the purpose. You may also ask for financial statements and annual reports straightway from the company you intend investing in.
4. You’ll also need to open a brokerage account prior to investing. You may select one of the online brokers charging a low rate of commission. Should you require any additional help before investing it will be worth consulting a professional broker in person. Of course, they provide additional information and guidance but charge for that.
5. Define aims of your investment and prepare your portfolio. Defining your goals, including time frame gives you a fair idea how to distribute your funds among bonds and stocks. Bonds give a regular income whereas stocks get appreciated over a long time.
Those were the basic points telling you how to invest in stocks and bonds.