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A stock is an equity security that represents ownership in a corporation. Each share of stock represents a claim on the corporation’s earnings and assets.  Corporations may issue both commonstock and preferred stock. Stockholders accept the risks inherent in owning a company.

Bonds

Mutual Funds

Derivative Instruments

Annuities

A bond represents the indebtedness of their issuer.  A bond is any interest-bearing or discounted government or corporate security that obligates the issuer to pay the bondholder a specified sum for the use of the money, usually at specific intervals, and to repay the principal amount of the loan at maturity.

A mutual fund is operated by an investment company that raises a pool of money from shareholders and invests it into stocks, bonds, options, futures, currencies or money market securities. All shareholders share equally in the gains and losses generated by the fund. A mutual fund’s investment objectives, risks, charges and expenses are stated in the prospectus.

A derivative instrument is a contract whose value is derived from the performance of an underlying financial asset, index or other investments.  When used properly, they  can create many benefits, including the reduction of risk.  Options are the most common derivatives.

An annuity is a form of contract sold by life insurance companies that guarantees a fixed or variable payment to the owner of the annuity, the annuitant, at some future time, usually at retirement.  All capital in an annuity grows tax-deferred.  

Confused?

Here at VBC Securities we take pride in our ability to understand our clients needs and provide them with investment strategies that fit those needs. If you have any questions about our investment products:

Stocks

Investment

Products

 

Mutual Funds

A mutual fund is operated by an investment company that raises a pool of money from shareholders and invests it into stocks, bonds, options, futures, currencies or money market securities. Mutual funds offer investors the advantage of diversification and professional management. A management fee is charged that typically runs between .5% and 2%. 

 

The mutual fund prospectus will disclose all other fees that are charged  like distribution fees (12b-1), exchange fees, redemption fees and other administration fees. A commission fee is charged on fund shares purchased through a broker. These are called load funds. No commission fee is charged on fund shares purchased directly from the investment company operating the fund.  These are called no-load funds.

 

Mutual fund shares are redeemable on demand at the fund’s net asset value (total assets minus total liabilities divided by shares outstanding).  All shareholders share equally in the gains and losses generated by the fund.  A mutual fund’s investment objective is stated in the prospectus.  Some typical fund types include:

 

Aggressive Growth Fund – invests in stocks of rapidly growing companies

 

Growth Fund – invests in stocks of growing companies

 

Value Fund – invests in stock of companies that are undervalued by the market as compared to their fundamental value

 

Balanced Fund — invests in common stock, preferred stock and bonds in effort to achieve highest return consistent with low-risk

 

Equity-income Fund – invests in stocks of companies that typically pay consistent dividends

 

Bond Fund – invests in bonds in attempt to produce a consistent, current income stream

 

Money Market Fund – invests in commercial paper, banker’s acceptance, repurchase agreements, government securities, CD’s and other highly liquid, safe securities

 

Index Fund – duplicates the composition of the index indicated in the name like a S&P 500 Index fund

 

  • All investments are subject to risk. Investments in bonds and bond funds are subject to interest rate, credit, and inflation risk.

  • Fund share prices will fluctuate, so investors could lose money if they sell shares when prices have fallen.

  • Investments in funds are not FDIC insured or bank guaranteed, and may lose value.

  • Diversification does not ensure a profit or protect against a loss in a declining market.

  • An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.  Although a money market fund seeks to preserve the investment value at $1 per share, it is possible to lose money by investing in such a fund.  Manager’s selections of investments could lead to market underperformance.

  • Decline in the market could lead to losses for a fund.

  • An Index fund may not meet its goal of closely tracking its benchmark.  Decline in the market benchmark will lead to losses for an index fund tracking the benchmark.

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