Safety in an investment means minimal risk of loss. To implement goals that stress a higher dollar return on their investment, investors must give up some safety. Savings accounts, certificates of deposit, corporate and government bonds, and certain stocks pay a predictable amount of interest or dividends each year. The firms listed in Table 20.2 have paid dividends to their owners for at least 90 years. To investors, growth means that their investment will increase or appreciate in value.
Liquidity is the ease with which an asset can be converted into cash.
Investments range from cash or cash equivalents to the other extreme of frozen investments, where it is impossible to get your money. They are the most conservative of all investments, and they provide safety and either income or growth. Interest paid on bank accounts can be withdrawn to serve as income. The interest can also be left on deposit to earn additional interest. Corporate and Government Bonds.