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Understanding investment types

Finding individual stocks and bonds

There are thousands of individual investments you could choose. Here are some ways to narrow your options down.
5 minute read

Points to know

  • You can narrow down stocks by looking at certain types of companies, or by considering metrics like growth and volatility.
  • When buying bonds, you'll need to think about your purchasing strategies as well as the types of issuers you're interested in.


The core of your portfolio should be made of mutual funds or ETFs (exchange-traded funds), which offer diversification and lower costs. Generally speaking, individual securities should make up only a small portion of your investments, if any. 

Individual stocks

You can focus on stocks by capitalization or sector. You may also want to look into other fundamentals such as the ones below.

Earnings per share

This divides a company's net profit by the number of stock shares available for trading. By looking at a stock's earnings per share over a period of several months or years, you can see how the company has grown.

Price/earnings ratio

This divides the stock's share price by the amount of earnings it's distributed in the last 12 months (per share). A high price/earnings ratio indicates that investors are expecting more growth in the future.

Because different industries have different prospects for growth, this indicator is mainly useful when comparing companies within the same industry.

Price/book ratio

This divides a stock's share price by the total value of all the company's assets minus its liabilities (per share). If the price/book ratio is low, the shares may be undervalued.

52-week high/low

This represents the highest and lowest prices at which the stock has traded in the past year. A stock that nears or passes its previous high or low could see additional trading volume and volatility.

Dividend yield

This divides the value of dividends paid in the past year (per share) by the stock's current share value. This can indicate how much of a company's cash flow is being passed through to investors.


This measures how volatile the stock is compared with the overall market.

Individual bonds

As you consider your bond purchases, keep these questions in mind:

  • Will you buy on the primary market or on the secondary market?
  • Will you buy Treasury bonds, corporate bonds, or some other type of bonds?
  • Could you benefit from buying tax-exempt municipal bonds?
  • Will you buy bonds that form a ladderbarbells, or another strategy?
  • Do you plan to sell your bonds, or hold them to maturity?
  • Are you concerned about the potential for bonds to be called early?
  • What level of risk are you willing to take with your bonds?

We have resources that can help you research individual bonds.

Search bonds offered through Vanguard

See information about upcoming Treasury auctions

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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. Bonds are subject to the risk that an issuer will fail to make payments on time and that bond prices will decline because of rising interest rates or negative perceptions of an issuer's ability to make payments.