Plus, your investment will earn current interest income. Equity Investments Equity portfolios purchase stock, or units of ownership, in companies. Market influences such as political events and actions of the Federal Reserve System also may cause the value of the investments to fall. If a company performs poorly, investors can lose all or part of their investment. Plus, the price may drop when the overall market goes down, even if a company is doing well.
International stocks carry the added risks of currency exchange rates and political instability.
As an owner, you may share in any company profits. Stocks have been one of the few investments that historically have beaten inflation. Bonds Bonds, also called fixed income investments, represent debt rather than equity. The issuer of the bond promises to repay you the original amount when the bond matures, plus a stated rate of interest. Bonds can be issued by a corporation, government or government agency.