Bonds, stocks, savings etc and payouts?
Question:
- Bonds (what types of bonds and what they do/mean)
- Stocks (same as above)
- Savings Account (same as above)
If I forgot something, I'd like additional info on that too.
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Also; Is there any way one can recieve a payout monthly or close to it? I've read an example somewhere that if someone had like $10 '000'000 on an account or bonds or stocks (don't remember which) and if the person had a 3% interest rate it would pay $300'000 monthly or quarterly.
A bond is simply a loan, in which the issuer (borrower) owes the holders (lender) a debt and is obliged to repay the principal and interest (the coupon) at a later date when the bond matures after a fixed term.
A stock is the capital raised by a corporation through the issuance and distribution of shares. A person or organisation which holds at least a partial share of stocks is called a shareholder.
Savings accounts are accounts maintained by commercial banks, savings and loan associations, credit unions, and mutual savings banks that pay interest but can not be used directly as money (by, for example, writing a cheque). These accounts let customers set aside a portion of their liquid assets that could be used to make purchases while earning a monetary return.
Based on my personal experience in investing, if you purchase a bond that promises a return of 3% p.a. with $10m, you will receive half-yearly payouts (each payout at $150k) until the bond matures. Stocks generally do not promise a fixed rate of return because they are traded freely at the stock exchange. As such you may experience capital gain or loss on your investment of $10m. In addition, some stocks pay dividends (akin to interests) to their shareholders. The dividends can be paid once a year, once every 6 months, once every quarter or as and when depending on individual company policies. However I have yet to see any stock that pays out dividend as frequently as once every month.
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