Financial Advice for All Life's Creeks

Month: September 2020

Understanding Stock Investments by Company Size

There is a universe of thousands of stocks available to choose from for your investment portfolio. The question must be asked about what kind of stocks to include in that portfolio. Should you put your money down on companies that are well-known to you and the rest of the world? Perhaps, but could you be missing out on some of the biggest gains on your investment.  
Stock Investments by Company Size  
Large capitalization (large cap) companies are those that are well-known to the world. They have a large capitalization because they have earned the trust and investment of the public over time. They have a lot of value to them because they are established companies and brands. They are considered the among the safest plays in the stock market because they already have a long track record of success. Many of these companies also pay a quarterly dividend to their loyal shareholders just for holding the stock. That can also be a valid reason to consider getting involved with them.  
The other side of the argument about investing is that sometimes the small-cap stocks make more sense. They can be used to find a smashing hit that others have yet to notice. Some of those smaller companies have not yet done enough to prove that they deserve big investments, but they can be just around the corner from major profitability. Those who invest early can get in on the ground floor of something huge. At the same time, the smaller companies also have a higher rate of failure than do the large ones. It is possible to lose it all on a bet on a smaller company. 
The risk tolerance of the individual investor is generally a good indicator of how they should make stock investments by company size. Many recommend putting the highest-risk investments out earlier on in life when there is more time to recoup the potential losses. As a person gets closer to retirement and requires more of their money, the shift to safer investments must occur at that point. 

Bond Investment Basics: Municipal Bonds

While there are several kinds of bonds, municipal bonds are among the most popular. A municipal bond is a government issued bond that is used to fun public services and planning, often being used to build roads and school, ports and airports and other forms of infrastructure. These bonds have recently been revitalized by new solutions utilizing technology to re-energize the system and make it more efficient. This has allowed for lower pricing and more accessibility for middle income investors where other binds might be too expensive. The trade of these bonds is far less restricted than generic stocks and are thus attractive to traders that wish to buy and sell their bonds more often, even as often buying and selling the same bond several times in a week.  
There are very clear and strict laws and regulations that cover how the money collected from the issuance of bonds and transactions are public and well-recorded, making these bonds attractive to the investor concerned with transparency and understanding of how their investment is being applied. They have competitive interest rates compared to similar alternatives, with an average interest rate somewhere around 4.5%. This consistency of return helps them to be a trusted and reliable place to invest over the long term.  
For the personal investor, municipal bonds are likely to always be a strong choice for investment, especially when the transparency of the issuer is of particular concern. 

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