Why we need stocks and bonds

October 20, 2016

Believe it or not, Society is coming to the point where all capable people need to invest in stocks or bonds. So what are stocks and bonds, and why do we need them?

They are valuable certificates purchased from businesses by investors. Businesses need investors’ money to build and sell products to customers for a profit. Investors need the certificate to retrieve their money with a bonus payment. That bonus payment is an enticement to invest in businesses.

Stock and Bonds are different from each other. Stocks represent part ownership in a business. The stock owner hopes to collect portions of business profits called dividends and to eventually sell the stock certificate for a bonus amount. Bonds are written promises to refund investors’ money with an extra amount called interest. Both potentially offer individuals an extra source of money.

Markets for stocks and bonds will grow and endure for future generations.  More individuals will become investors out of necessity.  The details of investing are interesting and challenging.

Copyright © 2016 Douglas R. Knight


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