If you’re looking for a safe investment, then you will definitely need to know what types of investments are safer than others. This will mean that the payout is lower in general, however, since you are far less likely to lose money, safe investments are ideal for retirement savings, or long-term investments. However, most people ask, “Are bonds safer than stocks?” The short answer is yes, but there are a few other factors that you need to consider.
In general, bonds are safer than stocks because the price of the bond is fixed when you purchase it. No matter what, according to the bond, you will be getting back the amount of money you paid for that bond after it matures. Stocks are different, as market changes will affect the price of the stock you’ve purchased. Therefore, bonds tend to be quite a bit safer as long as you choose good bonds.
What are good bonds? Well, you’ll want to do some research into the company or organization that you are buying bonds from. There are a lot of very safe bonds – government bonds are usually a pretty safe bet. As far as corporate bonds, you should make sure that you only buy bonds from a company that will still be around when your bond matures.
There are some bonds that you should definitely not buy – these are called junk bonds. Usually junk bonds are offered by companies that do not have a good track record, or that look as though they have just started up. If you are not sure about the history of a particular company, then you should not consider buying stocks or bonds from them. After all, the bonds won’t be worth anything if the company goes under before they mature!
If you’re looking for a very safe type of investment, then you should probably consider a well managed mutual fund. These funds usually invest in a number of different stocks and bonds. With a good, diverse portfolio, losses are usually evened out, and your money will be very safe.
To a smart investor, bonds are safer than stocks – but be wary of junk bonds and unwise investments.