![]() If you put all your money in bonds you probably wouldn't earn enough to beat inflation by much, depending on interest rates. You keep earning interest until the bond's maturity date. Your bond will come with a coupon rate that represents the percentage of your principal that you'll receive as an interest payment. Your principal? That's the amount you pay for a bond. Treasury bonds are generally considered a rock-solid investment because there's virtually no risk that you'll stop receiving interest or that you could lose your principal. Companies and governments issue bonds to raise money. With bonds, by contrast, you're a lender instead of an owner. ![]() ![]() When you buy stocks you become a partial owner. They're the slow-and-steady refuge when stocks aren't performing well. Bonds Photo credit: © iStock/NI QINīonds are the foil to stocks. How much you decide to allocate to stocks will depend on your goals, age and risk tolerance. If you want your money to grow substantially over time, you'll need at least some equity exposure. This could be due to a problem with the specific company that issued the shares or it could be caused by a general stock market crash. Individual stocks, mutual funds, index funds and ETFs all have something in common: they have the potential for relatively high returns, but also for relatively high risk.īuying stocks comes with what's called "equity exposure," the risk that the shares you own could fall in value or become worthless. You can also buy mutual funds, index funds or exchange-traded funds (ETFs). You don't have to buy shares in individual companies to invest in stocks. The goal is generally, as you’ve likely heard, to "buy low and sell high." ![]() As a shareholder, you can make money through dividends, from selling the stock for more than you paid or from both. Some pay dividends to their shareholders. Companies issue stocks as a way of raising money and spreading risk. When you buy shares in a company you're investing in stocks. To find a financial advisor who serves your area, try our free online matching tool. And unless you invest in a target date fund that automatically adjusts that asset allocation, you'll have to rebalance your assets over the course of your investing time frame.Ī financial advisor can help you manage your investment portfolio. Once you've decided to start investing your money, you'll have to decide on an asset allocation that's appropriate for your goals, age and risk tolerance. Asset Allocation Calculator Photo credit: © iStock/lukas_zb ![]()
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