Financial Architects

Today we're going to talk about the two main building blocks of investing: stocks and bonds.
If you've ever felt confused by these terms, you're not alone. Let's break it down in a way that actually makes sense.
A stock is a tiny piece of ownership in a company. When you buy a share of stock in, say, Apple, you literally own a small piece of that business. If Apple does well and grows, your piece becomes more valuable. If Apple has a rough year, your piece might lose value for a while.
For a short period of time, the Boston Celtics basketball team was publicly traded on the New York Stock Exchange. So, I bought one share for about fifty dollars. I ordered the share certificate and had it framed with a small brass plaque that said: Mark S Robertson… Owner…. Boston Celtics…. And it was true. As a shareholder, I literally owned a tiny share of the team (very tiny, in my case). Unfortunately, a few years later they took the team private. They bought back my one share for about seventy-five dollars. I’m no longer an owner, but I kept the plaque!
Now, bonds are totally different than stocks. A bond is basically a loan you make to a company or a government. You hand over your money, and they promise to pay you back on a specific date, plus interest along the way. It's a lot like lending money to a friend who writes you an IOU and says, "I'll pay you back in five years, and I'll give you 4% interest every year until then."
Bonds are generally more stable and predictable than stocks. You know what you're going to get. But the trade-off is that they usually don't grow your money as much over time.

For more information go to: RobertsonCFP.com

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