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 Investment advisor at ACU to discuss which investment options may work in your portfolio.

*Mutual funds and other securities are offered through Credential Securities, a division of Credential Qtrade Securities Inc. Credential Securities is a registered mark owned by Aviso Wealth Inc.

 

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