SECTION IV: INVESTMENTS

Advantages & Disadvantages of Individual Equities (Stocks)

Every investment has advantages and disadvantages. Stocks provide an attractive investment choice for some investors because they offer two reasons to buy them, including capital appreciation and income. Historically, stocks have had greater returns than any other asset class and have the potential to continue producing gains over time.

While stocks have those advantages, they also have some definite disadvantages that an investor needs to be aware of, such as the price of stocks can be quite volatile and stocks are not guaranteed to return anything. Thus, the possibility for high returns is greater with stocks, but so is the possibility of losing money. While the capital gains potential of stocks could result in higher returns, the volatility of the stock price and the potential for capital loss are risks that some investors cannot bear.

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