The New York Stock Exchange defines a stock as "an ownership interest in a corporation. Stock prices reflect the buy or sale price of stocks at a given moment.

Other classes of stocks include preferred stocks, which pay a fixed dividend, or restricted stocks, which have special trading conditions. Bonds, also known as notes or debentures, are a debt promise, issued by a company or government.

Difference Between Stocks & Commodities | husoxupowoj.web.fc2.com

Bonds are secured against the assets of the issuer, with a guaranteed rate of return. Bonds are not shares in the issuer and convey no ownership. They furnish a means for companies and governments to raise money and are traded openly on the markets.

Bonds have maturities in three categories, short less than a yearmedium 1 to 10 years and long over 10 years. Government bonds are also known as Treasuries or T-bills and are regarded as the safest of all investments.

Commodities are physical tradable goods listed on the stock market. Common commodities traded are metals, such as gold, silver and copper, agricultural products, such as corn, coffee and soybeans, and industrial commodities like oil and gas.

Special exchanges exist to facilitate trading commodities.

Great attention is paid to certain economically and politically sensitive commodities like oil and gold. Because oil in particular is widely used in many petroleum products, gasoline and plastics, changes to the oil price can have wide economic consequences. Each asset type can be traded and purchased by individual investors. However, each has its own ownership and trading style.

Stocks are bought and sold, held in a portfolio and accumulated over difference between trading commodities and stocks. Some pay out a dividend as a profit share from the company. Bonds are also traded, difference between trading commodities and stocks are longer term investments, paying a fixed yield per earnest money deposit when making an offer. Yields offered on new bonds change each time new bonds are issued.

Commodities are the most volatile of the three classes of assets, since they rely on physical supply and demand. Crop failure, overproduction, bad weather, political instability, consumer appetite, among other factors, directly influence the daily changes in prices.

Difference Between Stocks, Bonds & Commodities | husoxupowoj.web.fc2.com

Speculation also disproportionately affects commodities more than stocks or bonds. Commodities are priced differently. Each has a "spot price" and a "future price. Future prices are market expectations based on all the external factors that can influence the commodity coming to market. Investing in stocks, bonds and commodities offers risk and rewards. The main difference among them is a function of risk tolerance and time. Short-term investing can bring high risk and high rewards, longer term investing can bring lower risks and more stable returns.

The consensus among financial experts is that a mixed portfolio with all three asset classes produces the best long-term investment strategy.

Commodities vs. Equities

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