No matter where you’re located, money is a complicated matter, especially when there’s quite a bit of it. From Toronto to Edmonton and beyond, markets fluctuate and investment strategies change out of necessity, which makes the investment experience all the more bewildering for newcomers. If you feel confident about the state of your wealth and intend to use this capital in such a way that it becomes self-sustaining through market growth, it’s important to be educated about the best possible methods to make this happen smoothly. This means, first and foremost, learning the fundamentals, such as the differences between bonds and equity.
- Role As An Investor
The duties and responsibilities you have regarding your investments vary according to the nature of the investment. When you invest in bonds, for example, you are essentially taking on a long-term mode of debt from a company that will eventually pay the principal amount in due time – otherwise known as a maturity date. The issuer, in other words, owes the holders both the debt and its accumulated interest, which can be paid at fixed intervals. It’s beneficial, then, to maintain this bond for as long as it is reasonable to do so, and to avoid selling it at a discount, which could diminish your portfolio’s return in the long-run.
In the case of equity investments, you take hold of stocks that comprise a company, and as a result, you own a percentage of that company. The impact of your ownership is contingent upon the number of shares you decide to purchase. If you hold a majority of the shares, your influence on the company can be quite large, and your role as an owner must not be taken lightly. This position is perhaps more catered to experienced investors who are market-savvy and ready to juggle the responsibilities of being an investor with those of the business itself.
- Risk And Reward
Bonds and equities diverge when it comes to investment risk and reward. On the one hand, bonds offer interest revenue for as long as you are in possession of a bond. This amount depends not only on the interest rate (which is fixed), but how much you’ve invested. There is, however, a risk precisely because of the fixity of this rate. If the market changes drastically, such that it creates an environment of rising interest rates, your bond in now paying a rate lower than the new issues coming to market. Therefore, the bond becomes far less desirable in comparison to other investment options. While you’re holding a bond paying a predetermined (lower) rate, another investment that doesn’t have a fixed rate of return could potentially be far more lucrative.
On the other hand, equity investments can offer very high returns to the smart investor. As an owner, if the business does well, then so do you. In any case, you are reliant on the financial success of the company you’ve invested in. Consequently, you are able to profit from increases in the share price of the corporation itself. There are many gains to be made this way, but there is also the possibility of loss, as a company’s value could decrease and its share price will reflect this change.
No matter how well-educated on these matters you make yourself, however, the success of your portfolio is dependent upon the nature of your goals and what kinds of ventures you would be willing to involve yourself in; this is why hiring a team of professional asset managers is always a useful exercise – luckily, doing so is as easy as visiting Wealthmanagementcanada.com for information about the various teams of skilled investment counsellors that are at your disposal.
Indeed, Wealth Management Canada is an innovative and efficient service that can help put you in touch with an asset manager who has been screened for their track record with past clients, and then evaluated according to your needs and goals as an up-and-coming investor seeking to acquire the know-how and unbiased knowledge to effectively navigate the ever-changing market. Indeed, it is this platform’s aim to align you with an investment firm that has interests similar to your own, as opposed to the profit-oriented whims of a bank. These relationships are created according to a reliable database of client feedback and a great deal of communication, so you’ll be in the know every step of the way.
Working with a wealth advisor will no doubt make the aforementioned facts easier to understand and take advantage of. Indeed, firms of this nature are a great alternative to banks, insofar as they can pair you with a carefully-vetted investor who will cater to your needs specifically, either as someone interested in bonds, equity, or both. Before you know it, you’ll be in possession of some invaluable insights that will make your moves on the market generate a great deal of value in your portfolio.