Investing for Beginners – Basics of Bonds (For Dummies) Tutorial 10
What is a ‘Bond’
A bond is a debt investment in which an investor loans money to an entity (typically corporate or governmental) which borrows the funds for a defined period of time at a variable or fixed interest rate. Bonds are used by companies, municipalities, states and sovereign governments to raise money and finance a variety of projects and activities. Owners of bonds are debtholders, or creditors, of the i
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Stocks are an equity investment that represents part ownership in a corporation and entitles you to part of that corporation’s earnings and assets.
Common stock gives shareholders voting rights but no guarantee of dividend payments. Preferred stocks provides no voting rights but usually guarantees a dividend payment.
In the past, shareholders received a paper stock certificate — called a security — verifying the number of shares they owned. Today, share ownership is usually recorded electronically, and the shares are held in street name by your brokerage firm.
Investing in stocks can be tricky business. In fact, it’s best to treat all of your investment pursuits as a business. Heck, that’s what Benjamin Graham (Warren Buffett’s stock market mentor) recommended.
Before you buy your first stock, you should master the basics of stock investing. This won’t make you a great investor overnight, but only when you understand the fundamentals of investing can you learn how to invest in stocks with confidence.