Pros and cons of stocks and bonds
Stocks and bonds each have a different level of risk and behave differently in response to changes in the financial markets. They may also be key ingredients in your mutual funds.
Putting portions of your money into different types of investments could help you in case some of them don’t measure up.
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| Bonds |
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As you can see, each type of investment has its own potential rewards and risks. Stocks offer an opportunity for higher long-term returns compared with bonds but come with greater risk. Bonds are generally more stable than stocks but have provided lower long-term returns.
By owning a mix of different investments, you’re diversifying your portfolio. Doing so can curb the risks you’d assume by putting all of your money in a single type of investment.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity.
Return to topInvestors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in each fund’s prospectus and/or summary prospectus, which can be obtained from your plan’s financial professional or downloaded and should be read carefully before investing.