Pros and cons of stocks

Stocks
 Pros

Stocks typically have potential for higher returns compared with other types of investments over the long term.Some stocks pay dividens, which can cushion a drop in share price, provide extra income or be used to buy more shares.  

Pros

Great OpportunitiesAs you will undoubtedly be aware, the markets have been very volatile lately. There are two ways to look at this, you can be fearful or you can take advantage of the opportunities that arise.

LiquidityWith the exception of stocks that have a very low trading volume, if an investor wishes to sell a stock, the transaction can be executed almost instantly. This gives investors the peace of mind that if they want to get their money out of a particular stock or the market as a whole they can do so without delay.

Opportunity for Substantial ReturnsSmall investors may be drawn to the stock market because of the challenge of trying to pick the next big "winners" before other investors do. But the primary reason people purchase stocks is because compared with other investment vehicles, the historical returns stock investors receive have been higher.

Earn Income From DividendsThere are many relatively low-risk stocks at present that offer fantastic dividends yields, many well in excess of 3%. This is alone is much higher than treasuries and money market funds

Lots of help and AdviceIf you are new to trading stock market shares, there is a lot of free useful advice available online such as blogs like Brainstorm.

Cons

Stock prices can rise and fall dramatically.There is no guaranteed returns.  

Pros

Bonds tend to rise and fall less dramatically than stocks, which means their prices may fluctuate less.Certain bonds can provide a level of income stability.Some bonds, such as U.S. Treasuries, can provide both stability and liquidity .  

Cons

Historically, bonds have provided lower long-term returns than stocks.Bond prices fall when interest rates go up. Long-term bonds, especially, suffer from price fluctuations as interest rates rise and fall.

As you can see, each type of investment has its own potential rewards and risks. Stocks offer an opportunity for higher long-term returns compared with bonds but come with greater risk. Bonds are generally more stable than stocks but have provided lower long-term returns.

By owning a mix of different investments, you’re diversifying your portfolio. Doing so can curb the risks you’d assume by putting all of your money in a single type of investment.

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity.