Hi. I am Ann Zuraw and welcome back to Chicks, Chat and Change.
It is time for us to Change it up a little. A viewer said it would be very helpful to explain some basic financial terms that we all hear frequently in a way that would be very simple to understand.
So welcome to Financial Terminology 101.
Let’s start off with what the difference is between a stock and a bond. Let’s say that you own a cake company and you want to expand your business. You will need cash to help you make this happen so you sell a piece or pieces of your cake company to the public. Each piece you sell represents one piece of ownership in your company and is called a stock share. By selling pieces or shares in your cake business, you no longer own the whole cake. You are now held accountable to the share holders who own a piece of the cake. These shareholders are investing in your growth now and in the future. Each stock shares entitles the stock owner to vote at shareholders’ meetings and to receive dividends if and when they are available. They own a piece of your cake business forever or until they sell their shares hopefully at a profit–which would mean that their investment in the growth of your business had paid off.
Keep in mind that investing involves risk including the potential loss of principal. So we talked about Stocks, next time we will talk about bonds.