Tuesday, March 25, 2008

How to Invest Money - Stocks vs Currency

What I know and understand is the similarities between stocks on the senior exchange (publically traded securites) and currencies.

To make this simple, I will outline how they're the same. Lets begin with the easier one: Currency.

Currency:
1. publically traded
2. internationally recognized
3. holds tangible value and can be traded for other goods and services
4. certificate of note issued by a governing body

What are stocks?

Stock:
1. publically traded
2. internationally recognized
3. holds tangible value in relation to currency
4. certificate of note issued by a governing body

A public enterprise that graduates to a nationally recognized senior exchange also has the ability to be leveraged by tier 1 banks and financial institutions similar to real estate, meaning you can hold onto the asset and borrow against it to acquire more assets.

Currencies are issued by a governing body, Bank of Canada in Canada or the Federal Reserve in the US. Stocks are issued by the corporate enterprise or the corporate entities that issues the stock. What's the difference? A stock certificate is basically cash as it has par value to its fair market value, and the value of the stock is dictated directly by the amount of currency it can trade for.

Stocks vs Currencies, or stocks equals currencies?

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