People can invest in real estate, stocks, bonds, and commodities {investment, personal}.
Investment in minerals, animals, and grains {commodity}| is risky. Investment costs are moderate to buy and sell. Invested money can be unavailable in down markets. Commodity trading uses securities brokers.
Investment in money {money market}| has little risk. Investment costs little to buy and sell. Invested money is typically readily available. Money markets use securities brokers.
People can buy investment-company stocks {mutual fund}|. Investment companies buy and sell stocks on stock markets and bonds in bond markets, for profit.
types
Mutual funds can have different investment goals, such as high return rate per share {dividend, share}, high growth rate in stock value {equity, stock}, or moderate rates for both.
risk
Mutual funds invest in a greater variety of stocks and so lessen risk. Emphasis on growth is more risky. Investments in growth should use extra, not essential, money. Investment costs are moderate to buy and sell. Invested money can be unavailable in down markets.
commission
Mutual funds can charge a commission {load, commission} for buying or selling shares. Mutual funds can charge no commission {no-load mutual fund}.
open
Mutual funds {open-ended mutual fund} can keep issuing new shares to public. Mutual funds {closed-end fund} can have a fixed number of traded shares.
People have stocks, bonds, and commodities holdings {portfolio, investment}.
Corporations or investment companies prepare proposed investments {prospectus}|, to market offerings to investors.
Investment in property {real estate investment} has little long-term risk. Investment costs are high to buy and sell. Invested money is very unavailable. Investing uses real estate agents or brokers.
Investments {bond, investment}| can be company or government promises to pay a fixed interest rate after a date or up to a date, when investors can get principal back. Commercial-paper certificates can state that debtor agrees to pay amount on date. Bonds typically have higher interest rates than savings accounts.
government
USA government bonds are E, H, savings, treasury, and municipal bonds.
process
Bonds are sold for different amounts, and company pays back principal and interest to holder over time, typically quarterly.
tax
Income from bonds from cities {municipal bond} is free from federal and state tax. Income from bonds from states is free from federal tax.
market
People buy and sell bonds in a market {bond market}. Bonds vary in value compared to other investments, depending on interest rates in other investments, money value, and time to maturity. Investment in securities has little risk. Investment costs little to buy and sell. Invested money is typically readily available. People can buy into bond mutual funds.
Corporations can issue unsecured long-term bonds {debenture}|.
Bonds pay off at different times {maturity}|, such as 3, 6, or 9 months, or 1, 2, 5, 10, 20, 30, or 40 years.
regular insurance payment or regular bond payout {premium}|.
United States government sells bonds through banks {savings bond}| {U.S. Savings Bond}. Savings bonds sell at a percentage of face value and have a fixed period during which they can earn interest. For example, savings bond sold for $750 are worth $1000 in 30 years. If bond sells to someone else before 30 years, market determines interest. If you redeem bond after 30 years, value is $1000. Savings bonds typically have higher interest rates than savings accounts.
Banks can agree to pay deposited amount, plus interest at fixed rate, on a fixed date, if depositor leaves money in account until that date {deposit certificate} {certificate of deposit}| (CD).
Money can be in securities {time deposit} that you cannot liquidate until after a period.
People can buy shares {common stock, investment} {stock, investment} in corporations.
markets
Dealers can belong to markets {stock exchange} that list stocks for buying and selling. Brokers can buy and sell stocks that are not on stock exchanges {over-the-counter}.
dividend
Common stocks can pay yearly or quarterly dividends from corporation profits. Dividend amount and rate vary greatly.
price
Common-stock value depends on dividend paid or expected compared to stock price, stock price compared to company assets, expected profits or losses, and overall market state. Growth stocks can pay no dividend but have value, because people expect them to quickly rise in price.
preferred
Preferred stock can be ownership shares that have first claim to corporation assets.
People can order brokers to buy or sell stock when stock reaches a price level {stop order}|.
Securities can have a written value {face value}|, as opposed to market value.
Securities can have no face value {no-par}|, so you cannot redeem it, only sell it on the market.
Tradable legal documents {commercial paper}| include checks, promissory notes, bank drafts, deposit certificates, and most corporate bonds. Commercial paper can be non-transferable {non-negotiable}. In this case, debtor owes money to party. Commercial paper can be transferable {negotiable}. Debtor pays parties to whom paper transfers. Transfer can be by endorsement, the same as checks. Transfer can be by writing "pay to the bearer", as for corporate bonds. Transfer can be by delivery.
Legal negotiable-paper possessors {holder in due course} are not accountable for previous instrument-holder actions and have legal title to paper value. Finance companies that buy negotiable paper from merchants can get the money from consumers, even if merchants used deceit or other wrongful actions in original sales. Protection against negotiable paper is to have a restrictive clause in credit agreements to prevent commercial-paper transfer.
Commercial paper {negotiable instrument}| can be transferable. To be negotiable, maker or drawer must sign commercial paper, which must have an unconditional promise to pay, be payable at a certain time or on bearer demand, and be payable to bearer or to order. Negotiable commercial paper is stocks, bonds, over-the-counter stocks, stock exchange transactions, and bank and finance company transfers. If it has conditions, it is a contract.
Outline of Knowledge Database Home Page
Description of Outline of Knowledge Database
Date Modified: 2022.0225