Stocks, Bonds, and CDs - Ways to Invest

It's natural to be wary of the stock market in today's era of recession. However, if you have the money to spare, right now is a great time to invest your extra cash, whether in the stock market or in other modes of investment. The stock prices are lower, and generally investment prices are less as well. To help you feel more confident in navigating the investing world, this article will take a look at the various options you have for investing your money.

Perhaps the most obvious place to infuse your cash is the stock market. Basically, publicly traded companies offer their stock for sale on the stock exchange. This means that they are giving out shares in the company, and those who own shares in the company go along with the ups and downs of that specific business. For instance, if you buy shares in a start-up computer company, if the company does extremely well, your stock value can rise considerably. However, the same goes for downturns. If the start-up loses its momentum and begins to suffer in the amount of profit they bring in, your stock values will decrease.

The stock market is good place to invest because it can offer a quick turnaround on your investment. On the other hand, people have also lost millions of dollars if the stock exchange plummets into a recession.

Another place to put your money is in bonds. Bonds are like debt I.O.U.s. With bonds, the issuer needs capital in hand to complete a project. For example, let's say that the state government needs money to finance a highway building project. It can sell bonds to the public which pays back a certain amount of interest during the term of the bond, as well as the face value of the bond whenever it expires, or becomes due. Bonds tend to be much less risky than stocks, especially when government-issued. They pay back a fairly predictable amount in interest.

Lastly, another money-raiser is a CD. No, not a listening CD or compact disc, but a Certificate of Deposit. CDs are another fairly low-risk way to invest your money and earn interest. Basically, a person can go to a bank and deposit a certain amount of money. They agree to a specific time span of the deposit, as well as the interest rate. The interest rates for CDs are normally higher than the regular savings account interest rates. After the life span of the CD is up, a person can go to the bank and claim the original deposit, plus all of the interest that it accrued.

Luckily, the FDIC insures CDs up to $250,000, which is very helpful in the investment world because things like stocks aren't really insured, and you can suffer huge losses. However, a downside is that if you need the deposited money before the life span of the CD expires, you will probably have to pay a fee-kind of like paying a buyout fee in contracts.

Navigating the many places to invest your money can be confusing.

For more information regarding your investment options as well as other business-related topics, check out the helpful Business Directory today.

Joseph Devine

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