Tools - Bond, Stock, Option (part I)
before I say the following things, don't EVER borrow money for securities. (don't borrow money for IPO, play margin etc.) For house, seems inevitable.
Simple Investment Tools:
> Meaning: Simplest way speaking, is a timed debt which issuer needs to pay holder interest.
> Risk: only if the issuer disappear, otherwise you will get the money eventually.
> Return: Take US 10-year bond as reference: http://finance.yahoo.com/q?s=%5ETNX now is 4.468%
> Example: since 2002, I bought Hutchison 5 year Bond for 20K at 5% annual, every year I get money from hutchison 2 times, each is $500. 5 years later, Hutchison will pay me the 20K back, which means including interest, I will have 25K after 5 years.
:: Sounds Good? Yes, it is very safe if you have some spare money you know you will never move.
Stock
> Meaning: No need to explain ba, listed company to offer shares in financial market.
> Meaning: No need to explain ba, listed company to offer shares in financial market.
> Risk: Enron
> Return: I have read somewhere, all time all market mean return value for stock is 13%, if annual return less than 13%, your stock is not performing
:: Sounds Aggressive?