STOCK

Plain and simple, stock is a share in the ownership of a company. Stock represents a claim on the company’s assets and earnings. As you acquire more stock, your ownership stake in the company becomes greater. Whether you say shares, equity, or stock, it all means the same thing.

BONDS

A debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. Bonds are used by companies, municipalities, states, and U.S and foreign governments to finance a variety of projects and activities. Bonds are commonly referred to as fixed-income securities and are one of the three main asset classes, along with stocks and cash equivalents. The indebted Entity (issuer) issues a bond that states the interest rate (coupon) that will be paid and when the loaned funds (bond principal) are to be returned (maturity date). Interest on bonds is usually paid every six months (semi-annually). The main categories of bonds are corporate bonds, municipal bonds, and U.S. Treasury bonds, notes and bills, which are collectively referred to as simply “Treasures”. Two features of a bond – credit quality and duration – are the principal determinants of a bond’s interest rate. Bond maturities range from a 90-day Treasury bill to a 30-year government bond. Corporate and municipals are typically in the three to 10-year range.

Corporate Bonds

Municipal Bonds (Muni Bonds)

Treasury Bonds

Treasuries (Notes and Bills)

PRIVATE PLACEMENT

Raising of capital via private rather than public placement. The result is the sale of securities to a relatively small number of investors. Since a private placement is offered to a few, select individuals, the placement does not have to be registered with the Securities and Exchange Commission. In many cases detailed financial information is not disclosed and the need for a prospectus is waived.

HEALTH SAVINGS ACCOUNT (H.S.A.)

An account created for individuals who are covered under high-deductible health plans to save for medical expenses that HDHPs do not cover. Contributions are made into the account by the individual or the individual’s employer and are limited to a maximum amount each year. The contributions are invested over time and can be used to pay for qualified medical expenses, which include most medical care such as dental, vision and over-the-counter drugs. The HSA account has three major tax savings: the money contributed into the account is tax deductible, it grows tax free, and certain withdrawals are tax few if they are for qualified medical expenses. To qualify for an HSA account, you must have the coverage from a high-deductible health plan and you must not be enrolled in Medicare or be listed as a dependent on another person’s tax return.

FIXED ANNUITIES

A Fixed Annuity is a contract sold by an insurance company designed to provide a payment of a guaranteed amount to the holder at specified intervals, usually after retirement. The holder is taxed only when they start taking distributions or if they withdraw funds from the account. All annuities are tax-deferred, meaning that the earnings from investments in these accounts are tax-deferred until withdrawal. Annuity earnings are also tax-deferred so they cannot be withdrawn without penalty until a certain specified age.

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