What I need to point out first is that investors have long held the view that the return on stocks is much higher than that on bonds. However, I want to convince you that as an excellent investor, you need to make your portfolio comprehensive and reasonable.
In the following content, I will specify why you need to adjust your original portfolio structure.
For some companies that issue stocks and bonds, your ownership of their stocks means that you own part of their company's assets. When you buy their bonds, you become one of their creditors.
For stock holders, their income comes from the company's asset appreciation and operating income. For some major shareholders, they even have the voting right to decide the development direction of the company. However, you need to know that the above rights and interests are for shareholders who hold a large number of shares. As an ordinary minority shareholder, your earnings and dividends are generally the last in the queue in the capital distribution process. Bond holders often have a high priority in obtaining interest. If a company goes bankrupt, it needs to pay off the debts of the bondholders in time. For ordinary minority shareholders, they may even have no gain in the liquidation of assets.
One advantage of bond investment is that companies need to pay part of their debts to bondholders every month. Companies need to repay part of the interest for each bondholder before the maturity date of the bond. Although the bondholders may lose some funds after the bankruptcy of the companies, the bonds of the bondholders are paid preferentially by the companies, even prior to the major shareholders.
In addition, you need to know that as ordinary minority shareholders, you may not even get the dividends you deserve. The distribution of stock interest and dividends often depends on the opinions of the company's board of directors. If a company is in a loss state within a year or the managers invest the profits in the development of the company, the minority shareholders may not be able to obtain dividends. However, as a bond holder, you don't have to worry about not getting the monthly interest. Although buying stocks may bring more capital gains than buying bonds, they can be used to ensure asset growth. In addition, buying bonds can also ensure that investors have a certain amount of stable income. As a prudent investor, you need to consider buying bonds to protect your assets.
In conclusion, if you are an investor who is unwilling to take risks and pursues stable income, you can pay attention to the investment market of bonds.
