Stocks Vs. Bonds
as you look to build your portfolio, you'll find that you have a large number of investment options. the two biggest components of most portfolios are stocks and bonds. so, how should you use them? one decision to make concerns your goals for your portfolio. if you want your portfolio to provide a steady income stream or are you looking for a long-term growth. stocks generally produce the best growth over time. a careful selection of stocks including both large and small companies from diverse group of industries can produce excellent growth over time. for income, bonds are probably the better choice. bonds pay interest twice a year. an amount usually never changes over the life of the bond. investors can buy bonds issued by local and national governments as well as by major corporations. even if you are sure of your goals, there is always room for both stocks and bonds in every portfolio. for more aggressive investors who want growth, bonds can help balance the risk of stocks and stabilize the ups and downs on the market. for more risk-averse investors who chose an income ? portfolio of bonds, stocks can provide variable inflation protection. the amount of interest that bonds pay is usually fixed. so, an increase in inflation can reduce the value of those payments. stocks will help you protect your money from inflation because stock values often rise faster than an inflation. your stock purchases provide an opportunity for high reward and help to hedge against inflation, while bonds will provide ? safety net against stock market losses. a mixture of stocks and bonds can help investors to maximize profits and minimize risks.