Friday, September 30, 2016

What is the Better Investment Instrument Between Stock and Bond?

There is not a shred of doubt that only shares can give excellent results and create real wealth over a long period of time.
Bonds and Debentures just fixed income securities that offer no scope of capital appreciation, at least in India as of now. In advanced financial markets bond markets are highly mature allowing scope for a bit of capital appreciation and enhancing interest yield. Therefore they are merely like fixed deposits in banks with higher risks.
Investing in stocks directly however requires investing knowledge and there are two options before the investor:
Option 1: Making Investments Directly in Shares
Devote a couple of hours every day and learn and practice value investing. The best and only book I will recommend is “The Intelligent Investor” by Benjamin Graham.


You may also visit this blog “Wealth Vidya” and a few other value investing sites.


Caution:

Please beware of a number of books and websites that encourage people to engage in day-tradingmargin-trading and trading in futures and options, commodities and currencies. All these are not investing activities but purely speculative acts that have the potential to destroy the capital and even lives of people.


Option 2: Investments in Index Mutual Funds:
Those who cannot afford to learn investing have this easy and wonderful option of investing in Index Funds and Exchange Traded Funds (ETFs).

Long term Investing:
Whether you choose option one or two, please always remember that the secret behind investment success is the law of “Miracle of Compounding”, which requires you to keep investing and be invested for 20 to 50 years.


Conclusion:
There is not an iota of doubt that only shares or stocks are the investment vehicles that can yield investment success and real wealth creation.




1 comment:

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