Stocks and Bonds

Stocks* and bonds* are two well-known forms of investments; each carries its own benefits and risks. A well-diversified investment portfolio can include both stocks and bonds, together with cash investments (i.e. bank accounts, money market funds, GICs).

Stocks

A stock share represents part of a company that can be bought, sold and traded as an investment. A share's value can increase or decrease, depending on the company's financial performance. Owning stock in a company means you are an investor in that business.

Benefits

  • good potential return; the better a company performs financially, the more its stock is worth but the reverse is true as well, meaning there is a greater potential risk
  • flexibility; stocks can be held indefinitely, so you can sell them when the time is right for you, not at the end of a fixed term
  • ownership; when you purchase stock you own a part of the company, which normally entitles you to vote at the shareholders' meeting and means you also receive a portion of the company's profits
  • performance; historically, the stock market has outperformed other assets including cash and bonds
  • variety; there is great variety in the stock market, including preferred and common stocks

Bonds

A bond represents a loan to a corporation or a government that is trying to raise funds. Purchasing a bond lends your investment to the organization that issued it.

Benefits

  • government-backed bonds, corporate bonds from large financial firms, industrial corporations, public utilities, and transportation companies may be lower risk than stocks or bonds from smaller companies
  • security; bonds are typically more immune to stock market volatility
  • predictability; many bonds provide a fixed rate of return over a defined period of time, though this is not guaranteed
  • variety; there are many different kinds of bonds, including floating rate, convertible and callable bonds

Please contact a Credential Securities Inc. Investment advisor at ACU to discuss which investment options may work in your portfolio.

*Mutual funds and other securities are offered through Credential Securities Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise stated, mutual funds, other securities and cash balances are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer that insures deposits in credit unions. Mutual funds and other securities are not guaranteed, their values change frequently and past performance may not be repeated. Credential Securities Inc. is a Member of the Canadian Investor Protection Fund.

®Credential Securities is a registered mark owned by Credential Financial Inc. and is used under licence.

 

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