After spending decades in the financial services industry and for more than four decades in leadership, consulting, personal development and other planning-related areas, as well as for more than 15 years as a licensed real estate salesperson, in In the State of New York, I have come to, I strongly believe, that a large percentage of Americans appear to lack competency and/or basic knowledge and understanding of even the most basic investment concepts. Although, most of these people seem to believe, they understand, when you listen, people, who have income-oriented investments, question growth and/or, vice versaOne realizes that it may be useful to introduce some kind of basic manual to improve knowledge and understanding in these types of matters. With that in mind, this article will attempt to briefly consider, examine, review, and discuss some of these basic differences, and hopefully help people make wiser decisions for their specific circumstances, etc.
1. Inventory: There are a variety of different types of stocks, which generally fall into 2 basic general classifications/categories, either preferred or common. One of the key differences is that common stock ownership gives someone more stake, in terms of voting and/or decision making, it also carries more risk! Generally, preferred rates have less fluctuation and give/distribute higher dividends, etc. In addition, some companies are considered, lbig – capsversus, others, who are, small or medium caps! This has to do with the total amount of capitalization and/or the value that these shares hold, etc.! The sector, of a particular corporation, or basic industry must also be considered. Times change and some industries perform better than others after these changes! Some of these investments are considered safer, while others are more speculative! Perhaps the key to understanding is that a stock represents ownership and shares either risk or greater success!
2. Jumps: Unlike owning stock, bonds represent debt obligations of a corporation and/or government entity (municipal/local; federal). Often defined as a debt obligation, backed by the full faith, etc., of the backing entity and/or by a specified stream of income. Obviously, the former are generally safer and more reliable, while the latter may pay a higher dividend rate. Municipal bonds, from the state in which you reside, offer tax-free status, both at the federal and state levels, as long as they are. from other areas, only federal taxes are saved. It is also important to recognize that US Treasury Bonds, Bills and Notes, while considered the safest investment, offer lower rates and are only tax-free in terms of local taxes.
3. Bank interest versus corporate dividends: Banks pay interest, while corporations pay dividends! Remember, however, that while the FDIC supports most savings deposits, corporate dividends are not guaranteed in most cases! That’s one main reason, corporations generally pay a higher rate of return. Also, recognize that all corporations are not created equal, and since any bond is backed by the specific company, the degree of risk can vary significantly.
Four. real estate: Investment real estate, when used knowingly, can offer the type of overall return, including tax considerations/advantages, rent, income, and asset value growth. However, the benefits of this area, many times, depend on a variety of factors, while understanding, generally, it does not offer, the degree of liquidity, other ways, can offer.
It is important to have the basic knowledge, which will allow you, in order to improve your chances, to make the wisest and most personally satisfying investment decisions, based on a degree of understanding, and to hire the best professionals, for your circumstances and needs. ! The more you know the better!