Investing in bonds is generally safer than investing in stocks. This is because stock investment doesn’t come with a guaranteed ROI, whereas a bond is something like a loan and has a promised ROI, plus interest.
– There is a distinction between guaranteed and promised. In fact, there isn’t an investment that’s guaranteed. However, with bonds, you know what you’ll be getting at the end of the day. Seek out investments in a company with proven record as it’s less likely to go bankrupt.
– Bonds are normally paid back to you by year-end. Nevertheless, the terms can vary for one agreement to another.
– The bigger the bond, the bigger the profit. But bearing in mind, you’ll be making more money on a higher interest bond. So, it would be better for you to invest your money in one high interest bond instead of two or more, lower interest bonds.
2. Stocks. As mentioned above, there is an element of risk when investing in all types of investments, but for stocks, the ROI will be higher. Of course, you can cut down your risks by investing in safer or defensive stocks.
– Companies like Kentucky Fried Chicken (KFC), The Procter & Gamble Company (P & G), Johnson & Johnson (JNJ) and Wal-Mart Stores Inc. (WMT) are among the safer picks in the stock market. These companies also place higher value on their shareholders’ positive return of dividends.
– Investing in defensive stocks that are reliable and have proven record of their sustainability and profitability, gives some security that you wouldn’t get when investing in the newer and lesser-known companies, which can wind up at any time.
– Bear in mind, there are no one hundred per cent safe picks when investing in stocks, but you can lower your risk by going for stocks of a time-tested and profitable company. Alternatively, you can spread out your risk by investing your money in profitable and time-tested mutual funds where your ROI will be based on a part of a whole portfolio of stocks.
– Stocks can be a better pick for your long-term investment plans. If you’re an investor who can’t afford to take higher risk, go for a long-standing profitable company to place your investment.
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