Stocks and Bonds

In the case of stock and bond, I will be more prefers to invest in stocks rather than invest in other type of securities because I'd rather own something for a period of years in hope for growth, so I would consider myself to become a stocks investor. Although stocks have it disadvantages but I think the advantages of stocks can be cover those disadvantages and bring a lot of benefits to stocks investor.

The disadvantages of stocks compare with bonds are invest in stocks have higher risk than invest in bonds. Because of high risk high return. Invest in stocks may lose a large proportion of their value very quickly compare to bonds and lastly it will be worth nothing. On the other hands, for stocks, dividends are not so predictable, it rise or fall is according to the company's performance. And invest in stocks that are not guarantee to return anything to the investor. But for bonds, the income you receive is known from the starts, and is usually fixed and if you hold bonds until it maturity dates, you will be repaid their par value. Besides that, bonds has an advantage compare to stock which is bond has the priority to claim for payment. In the cases of bankruptcy, bondholders that act as a debtor will be firstly to claim for the payment from the company while stockholders that act as the owner of the company will be the last person to claim for payment. Thus, bond is suitable for the people who only wish to receive current income periodically such as retirees and parents. So for stocks investor, they may losing a lot of money if the company goes bankruptcy or the economy is in recession.

Although there have a lot of disadvantages invest in stocks, but invest in stocks also will bring a lot of benefits to stocks investor. First, as compared with a bondholder, as a stockholder by owning shares will allows me to own a piece of ownership of the companies. But as a bondholder, I do not own any ownership of the company. On the other hands, stockholders have the voting right when a company is making decision. They are able to ensure that what company does is following their decision to make more profit in order to increase their dividend. Stock can be said is more suitable for knowledgeable person because they can do the research and determine what benefits to them are while a company is making decision. Bondholders do not have any voting right to a company's decision making as they are only the debtor to a company. They only receive the interest from the bond.

In additional, while you own the stocks, you can receive any dividend that company declares. So this allows me to a portion of a profit that company makes by equaling to my shareholding. But as a bondholder, I am just a creditor of the company and although I will receive the interest and capital payments but the amount do not go up if the economy is good and the companies is growing profit, so I may miss out on big capital gains in the equity market. Besides that, stocks offer better opportunities for capital growth this is because prices move faster and much greater as compared to bonds.

On the other hand, if I invest in stocks, I may get a higher return which is reaching my expectation but I must face a higher risk than bond. Stock is very suitable for the aggressive investors who are prefer to accept higher risk to get a higher return while bond usually is more suitable for conservative investors who are generally avoid risk even though there is only low return compensated due to lower risk. For the aggressive investors, they are fond to risk as they are always taking high risk investment to get a high return. For example, many young and aggressive