💼 Stocks vs. Bonds 💼
💼 Stocks are issued by companies to raise capital, paid-up or share, in order to grow the business or undertake new projects.
💼 There are important distinctions between whether somebody buys shares directly from the company when it issued them (in the primary market) or from another shareholder (on the secondary market).
💼 When the corporation issued shares, it does so in return for money.
💼 Bonds are fundamentally different for stocks in a number of ways.
💼 First, bondholders are creditors to the corporation, and are entitled to interest as well as repayment of principal.
💼 Creditors are given legal priority over other stakeholders in the event of a bankruptcy and will be made while first if a company is forced to sell assets in order to repay them.
💼 Shareholders, on the other hand, are last in line and often receive nothing, or mere pennies on the dollar, in the event of bankruptcy.
💼 This implies that stocks are inherently riskier investments that bonds.
Adam Hayes
@FinancialFreedomMagazine
💼 Stocks are issued by companies to raise capital, paid-up or share, in order to grow the business or undertake new projects.
💼 There are important distinctions between whether somebody buys shares directly from the company when it issued them (in the primary market) or from another shareholder (on the secondary market).
💼 When the corporation issued shares, it does so in return for money.
💼 Bonds are fundamentally different for stocks in a number of ways.
💼 First, bondholders are creditors to the corporation, and are entitled to interest as well as repayment of principal.
💼 Creditors are given legal priority over other stakeholders in the event of a bankruptcy and will be made while first if a company is forced to sell assets in order to repay them.
💼 Shareholders, on the other hand, are last in line and often receive nothing, or mere pennies on the dollar, in the event of bankruptcy.
💼 This implies that stocks are inherently riskier investments that bonds.
Adam Hayes
@FinancialFreedomMagazine