Points to know
- Most investors divide their portfolios between stocks and bonds, with potentially a small cash portion.
- There are many different types of stocks and bonds that offer various levels of risk and reward.
- In addition to stocks and bonds, there are other kinds of investments that add additional risk and complexity, which may not be right for everyone.
Certificate of deposit (CD)
An insured, interest-bearing deposit that requires the depositor to keep the money invested for a specific period of time or face penalties. Brokered CDs can be traded on the secondary market.
Usually refers to investment risk, which is a measure of how likely it is that you could lose money in an investment. However, there are other types of risk when it comes to investing.
The sum total of your investments managed toward a specific goal.
A bond represents a loan made to a corporation or government in exchange for regular interest payments. The bond issuer agrees to pay back the loan by a specific date. Bonds can be traded on the secondary market.
Income you can receive by investing in bonds or cash investments. The investment's interest rate is specified when it's issued.
The interest and dividends generated by an investment.
Usually refers to common stock, which is an investment that represents part ownership in a corporation. Each share of stock is a proportional stake in the corporation's assets and profits.
The strategy of investing in multiple asset classes and among many securities in an attempt to lower overall investment risk.
Other kinds of investments
Your portfolio will probably be mostly made up of stock and bond investments, and potentially some cash. But there are other types of assets you might want, depending on your goal and how sophisticated your investment strategy is.
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*Source: Donald G. Bennyhoff and Francis M. Kinniry Jr., 2016. Vanguard Advisor's Alpha®. Valley Forge, Pa.: The Vanguard Group.
All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss.
Investments in bonds are subject to interest rate, credit, and inflation risk.
Investments in stocks and bonds issued by non-U.S. companies are subject to risks including country/regional risk, which is the chance that political upheaval, financial troubles, or natural disasters will adversely affect the value of securities issued by companies in foreign countries or regions; and currency risk, which is the chance that the value of a foreign investment, measured in U.S. dollars, will decrease because of unfavorable changes in currency exchange rates.
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Please review the Form CRS and Vanguard Personal Advisor Services Brochure for important details about the service, including its asset based service levels and fee breakpoints.
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