Wealth Creation Blog

If you are considering ways to create wealth, you are most likely familiar with the general terms for building your investment strategy. It is important to build on what you know by becoming more specific is the ways that you apply your wealth building block in order to create infinite investment options. Although, there are a great number of options available to create wealth, the basic strategies include bonds, cash and stocks. Now, let us take a closer look at all three.

Bonds

Bonds are also known as ‘debt instruments’. Basically, they are the way that companies on all different levels of the government have access borrowing to money. Fundamentally, when you purchase a bond, you are in fact loaning out your money. In theory, you will in return receive payments of interest in addition to the original amount once your bond matures. Rarely, do investors hold the bonds until they are mature. The bonds are typically purchased, and then it is sold on the secondary market several times over as the bond ages. This means that the actual face value of the bond is susceptible to variation.

Cash

If you hear someone talking about the amount of cash that they have in his or her portfolio, this does not mean the actual cash in their wallet. They are speaking of cash investments. With a cash investment, the amount that you invest does not fluctuate. Plain vanilla savings, money markets and CDs are common cash investments.

Stocks

If you own stock in a business, you own part of that business. You may only hold a few shares, but no matter how small the percentage ownership is ownership. Now this does not give you the right to go to the home office and tell the CEO how to run the place, nor does it give you the right to wheel out an office chair or eat a snack in the employee lounge. Holding stock in a company simply means that you are entitled to a portion of the money that the business earns. For example, if your shares add up to 10% of the company and the company earns $100, 000, your shares are worth $10,000.

Sean Rasmussen
Success Communicator
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