For individuals, there are several ways of investment such as bond, stock and fund. It will be much more difficult to pick out which one is much better if you are not familiar with them.
For individuals, there are several ways of investment such as bond, stock and fund. It will be much more difficult to pick out which one is much better if you are not familiar with them. It will be readily seen that bond may be the best investment tool, which could guarantee the safety as well as considerable profits, if we make comparison among the bond, stock and fund.
Stock
Stock is a sort of voucher that is issued by joint-stock company, a kind form of corporation stock. The investor could become the owner of the publisher after purchasing the stocks and finally, obtain the income according to the quota of stock and make strategic decision.
Securities Investment Funds
Securities Investment Funds, with co-sharing the profits as well as the risks, is a kind of investment way. Through issuing the unit, a company could collect the funds of investor. It is a sort of stock or bond, which mandated by the trustee, and used by the fund manager.
Bond
Bond is issued according the legal proceedings by a bond issuer and the repaying of the capital with interest must be done in a certain period.
Differences
There are some differences among Securities Investment Funds, stock and bond.
The difference in the investors’ status
The shareholder is entitled to put out their own opinion on the strategic decision. The creditor is just the bond issuer who enjoys the principal and interest.
The difference in the degree of the risks
General speaking, the risk degree of stock is larger than fund. For the medium and small investors, they could only invest few stocks directly because of the restrictions of the amount of disposable capital. Consequentially, this practice violates invest taboo—put all the eggs in one basket. That’s to say, when the stock declines or the financial situation worsens, the capital may come to naught. However, the fundamental principle of fund is Portfolio investment, which can diversify the risks, and use the capital in securities that have different deadline and categories according to different proportion with the hope of reducing the risk to the minimum extent. In the ordinary course of events, the risk of bond is smaller than fund because of the guaranty and profit fixation.
The difference in profits
It’s dubious in the profits of funds and socks, but the profit of bond is fixed. General speaking, the profit of funds is higher than bond. Take the American capital fund as well as the international capital fund as an example, the average rate of earnings’ growth between 1976 and 1981 is 301.6%, and the highest rate in 20C is 465%, the lowest is 243%; but the rate of the two kind of 5-year-tap fund issued in 1996 is respective 13.06% and 8.8%.
The differences in investment way
Comparing to the stock and bond, securities investment fund is an indirect investment way, the investor couldn’t not take part in the business activities of portfolio directly, not share the investment risk any more, and the professor is in charge of the decision of investment direction and the investees.
The difference in price tropism
Under the similar economic situation, the price of fund is relied upon the net cost of capital. The main factor that influences the bond price is interest rate; and the supply-and-demand relation greatly influences the stock price.
The difference in recycling the capital
The bond investment has its own deadline, and after the expiration, the principal must be back; stock investment is unlimited, only if the firm goes bankrupt and in liquidation, the investors mustn’t regain the investment from the company, and if they want to retake, they only could change it into cash according the price in the brokerage market. Capital fund is different because of the capital pattern; closed-end fund has limited deadline, and after the expiration, the investor could get the over plus capital according to the share. During the closure, it could be changed into cash in the market. Normally, open-end fund has no deadline, but the investor could require the fund manager redeeming the fund at any time.