Stocks and Bonds
Stocks and bonds may all play an important role in helping you balance, or diversify your portfolio. Understanding how to create an appropriate balance and choosing investments to pursue your investment goals requires careful research and solid market knowledge.
Our Financial Advisors can guide you through the process of deciding how stocks and bonds may fit into your portfolio.
Stocks represent ownership shares in a publicly traded company. When you buy shares of a stock, you own a part of the company. As a shareholder, your investment will rise or fall with the price of the stock. Your investment may also appreciate over time as the value of a company appreciates or depreciates as the value of the company decreases.
Although stocks carry higher investment risk than bonds or money market investments, they also have historically delivered higher rates of return over long holding periods.
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A Look at Returns Over Time
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Consider how different asset classes have performed over the 20 years
ended December 31, 2003.
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Asset Class Average Annual Total Return
(includes reinvested dividends)
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Stocks
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14.3%
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Bonds
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11.5%
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Cash
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5.2%
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Source: Standard & Poor's, 2004. Past performance is no guarantee of future results. Based on total annual returns from 1984 to 2004. Stocks are represented by the total annual returns of the S&P 500. Bonds are represented by the total annual returns of long-term Treasuries (10+ year’s maturity). Cash is represented by the total annual returns of three-month T-bills. Individuals cannot invest directly in any index.
Bonds are essentially "IOUs" for money loaned by an investor to the bond's issuer. In return for the use of that money, the investor typically receives regular interest income along with the promise that the loan will be repaid at a designated "maturity" date. There are many types of bonds - corporate, government, municipal, etc. –
For those investors interested in tax efficiency, municipal bonds might be one of the better choices. The interest earned on municipal bonds is exempt from federal income taxes and often from state and local taxes as well.
Your Financial Advisor can help you decide how stocks and bonds may fit in your portfolio.
Schedule an appointment with a Financial Advisor or click here to get information on opening an account. Please Email Us: investments@firstbalticbancorp.com
*Income from municipal bonds and the funds that invest in them maybe subject to the alternative minimum tax. Neither Fiduciary & Trust Services, SA. nor any of its subsidiaries are tax advisers. We suggest you consult them personal tax or legal adviser before making tax or legal related investment decisions.
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