Equity vs Debt - Which Is The Better Investment?
Imagine for a moment that you are a small business owner. You have been running your widgets company quite successfully, employing a small staff and enjoying the profits rolling in. So why would you share these profits with literally thousands of people? The answer is simple: in order to grow, a company needs to either go into debt, sell a part of the company in order to raise money. So you can either finance that growth by borrowing from the bank, or by issuing bonds. This is called debt financing. So while you own 100% of the company, you owe a lot of money. On the other hand, you could sell stock in the company. ...
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