Stocks and Bonds are different in many ways. A stock is a portion or share of the ownership of a corporation. A share will give the owner of the stock the company’s profits or loses over time. The good thing about stocks is they can be sold at almost any time as long as there is someone willing to buy. A bond, on the other hand, is a fixed interest financial asset issued by governments, companies, banks, and other large entities.
Bonds also are called funds. Bonds pay the owner a fixed amount a specific date, or on specified dates depending on the type of bond. If the bond is a discount bond, then there is one pay date at the end. If the bond is a coupon bond, then it pays a fixed amount over a specific time. The time could be by month, or by year. My team was assigned the task of investing 120,000 dollars over ten years. We were to invest 80% of 120,000 dollars in stocks and 20% in bonds. We invested in six different stocks and two bonds. Also, we split the money. Therefore, we each invested 6,000 dollars per year in three stocks and one bond.
The first stock I decided to invest in was Nike Inc. Nike Inc. is a strongly advertised and a well-distributed company (Nike). Nike Inc. is known well across the world (Nike). When it comes to shoes, clothes, or sports apparel, everyone has at least one item of Nike. In most cases, people own multiple things of Nike equipment. Nike Inc. spends great amounts of time and money on their products (Nike). Also, Nike Inc. is extremely popular among sports. That is relevant because I am an athlete, and own many Nike products. Almost every pair of shoes I own is Nike, besides dress shoes. This all proceeded to tell me, as an investor, to get involved in a part of the company.
I took 2,000 dollars of the 6,000 dollars and invested in Nike Inc. Every year for ten years I bought 2,000 dollars worth of shares. The number of shares each year ranged from 24 shares to 42 shares of Nike Inc. stock. In April of 2007, there was a stock split for Nike Inc. The shares split 2:1. So the number of shares I owned up to that point doubled. I owned roughly 197 shares before the 2:1 split. After the split I accumulated about 395 shares. The total number of shares at the end of ten years was approximately 527 shares. My shares sold for $89.34 each. The total earned from Nike Inc. was $47,130.76.
Another stock is Buckle Inc. This is another company in the clothing industry; however, Buckle Inc. surprised me with how well they did. Buckle Inc. is a popular clothing store for young adults (Buckle). They have jeans, dress shirts, shoes, and other clothing (Buckle). Their products can get expensive, but they are made well (Buckle). Many young adults shop at Buckle Inc. for the variety of trendy options they offer (Buckle). This is relevant because I am a young adult, and have shopped at Buckle before. I also know many friends and family who has shopped in Buckle as well. If someone asks around looking for a nice pair of jeans the answer is, “Have you tried Buckle? They have a nice selection.”
Like in Nike Inc., I took 2,000 dollars to invest in this fine company. In 2001 when I started, the shares were quite low in price. The first year I owned over 100 shares. Unlike Nike Inc., there was more than one split for Buckle Inc. There were two stock splits within the ten years. One split came in January of 2007, and another split came in October of 2008. Both of the stock splits were 3:2 splits. Prior to the first split I owned around 460 shares. After the split I owned about 690 shares. Before the second split I had approximately 786 shares. Following the second split I owned around 1,180 shares. The total number of shares in the end was about 1362 shares. Each sold for $44.21 coming to a total of $60,238.45.
The last stock I invested in was in the outrageous oil and gas industry. The oil and gas industry can be a risky investment; therefore, I was not guaranteed to come out on top or, in another words, succeed. If success were the outcome, the profit would be fairly significant. I tried Chevron Corporation because they seemed reliable compared to other oil and gas companies (Chevron). Chevron Corporation has been known to strive beyond expectations, and care for the safety of the workforce and environment (Chevron).
Chevron products are recognized for their quality, performance, and technology around the world (Chevron). I decided to be on the safe side and only invest 1,000 dollars in Chevron Corporation because of the risk factor that comes into play with the oil and gas industry. Chevron Corporation actually did well after all. The share prices were high to start with. Chevron Corporation had one stock split within the ten years.
In September of 2004, the 2:1 split helped my number of shares go from about 48 shares to around 97 shares total. In the end I owned a total of approximately 180 shares. These shares sold for a big $105.38 each. This nearly doubled the 10,000 dollars. The total after the ten years in Chevron Corporation was $18,982.67.
The one mutual fund I invested in was with PIMCO. This global investment authority offers many different bonds such as: absolute return bonds, asset allocations, convertibles, municipal bonds, core bonds, etc. (PIMCO). The bond I chose was a core bond. This bond was the PIMCO Total Return Fund. This particular fund focuses on a solid core fixed-income (PIMCO). The fund will typically invest in a diversified portfolio of securities (PIMCO). One thing I noticed when researching PIMCO Total Return Fund was that the worst one year return for this bond was 0.28% (PIMCO).
This made PIMCO a reliable source in my eyes. I selected to invest 1,000 dollars with PIMCO because it is a popular, reliable investment company. The shares for this fund had a low price. Each share was $10.65 in July of 2001. This investment consisted of many more shares at a much lower price. I owned roughly 90 more shares every year. The total number of shares after ten years was about 1030 shares. Each share sold for $11.12. This gave me a total of $11,456.71 in returns.
After investing 60,000 dollars over ten years in three stocks and one bond, I accumulated a total of $137,808.59. Buckle Inc. was my best investment earning $60,238.45 over ten years. Surprisingly Buckle Inc. was able to triple its profit over the total ten years I invested. Nike Inc. over doubled in the ten years. Nike Inc. did quite well throughout the ten years. Chevron was the least earning stock; however, this investment earned almost double the 10,000 dollars initially spent on the stock.
The PIMCO Total Return Fund was what Dr. Duke considers a low risk/low reward investment. The PIMCO Total Return Fund was conservative. The total at the end of ten years in the PIMCO Fund was $11,456.71. This fund earned a small amount over 14% profit. This was actual a very respectable profit for a mutual fund. Overall the total return from all the investments was a tremendous profit. Going from 60,000 dollars to 137,000 dollars was remarkable. Not everyone succeeds in the market; however, this is a great illustration of how well someone can do in the world of investment when it comes to stocks and bonds.
Works Cited “Buckle Inc.” Buckle.com: Men's and Women's On-Trend Fashion Clothing & Designer Jeans. Web. 13 Nov. 2011. . “Nike.” Nike - Please Choose Your Nike Region. Web. 12 Nov. 2011. . “PIMCO.” PIMCO – Your Global Investment Authority | Home. Web. 13 Nov. 2011. . "The Chevron Way | About Chevron | Chevron." Chevron Corporation Home - Human Energy. Web. 12 Nov. 2011. . "Today's Markets - Yahoo! Finance - The Basics of Investing." Yahoo! Finance - Business Finance, Stock Market, Quotes, News. Web. 11 Nov. 2011. .