Stocks, bonds, cash & other assets

A common stock represents an ownership interest in a company. Shareholders may benefit if the business grows and may receive dividends if declared, but they are residual claimants: the share price can fall and the company can fail. Ordinary shareholders generally rank behind creditors in liquidation.

A bond is a debt instrument: an issuer borrows under specified terms. A bond's coupon, maturity, credit quality, call features, and market yield all matter. Bondholders face default risk, interest-rate risk, inflation risk, and sometimes liquidity risk. A higher yield can reflect higher risk—not a free upgrade.

Bank deposits, Treasury bills, money-market mutual funds, and stable-value products are not interchangeable. Deposit insurance applies to eligible deposits at insured institutions within applicable limits; it does not insure securities or protect against inflation. A money-market mutual fund is an investment fund, not a bank deposit, and is not FDIC-insured.

Real estate, commodities, and infrastructure can behave differently from stocks and bonds, but prices, costs, leverage, concentration, and access vary widely. A REIT is a company or trust that owns or finances real estate; it is still an equity investment with its own risks, not a substitute for a diversified portfolio by default.

• For a security: identify the issuer, legal structure, seniority, and what could make it lose value.
• For a fund: check the prospectus, index or strategy, holdings, fees, turnover, concentration, and distributions.
• A fund can own risky assets even if its name includes words such as “income,” “balanced,” or “low volatility.”