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Chapter 10. Everything You Need to Know ... > The Basics of Investing - Pg. 102

Everything You Need to Know About Investing Your 401(k) Money 102 Terms to Know When you buy stock in a company, you own a small amount of that company. Companies issue stock to raise money to run and expand the company. A company invites the public to participate by issuing shares to the public. Ownership is determined by the number of shares that you own. When you buy stock, your total loss is limited to the shares you own. So are bonds good investments against inflation? Answer: No. Are they safety-oriented invest- ments? Answer: No. (Some people claim bonds are perfectly safe. We maintain the Will Rogers philosophy of safety: "We are more interested in the return OF our money than the return ON our money!") Because our money is subject to loss if we must get out of the bond before maturity, (or if the bond issuer goes out of business) bonds do not meet our definition of a cash equivalent. When deciding which investments to buy, you must be true to your goal. In other words, buying bonds as a hedge against inflation or for safety clearly is not the smart thing to do. You buy bonds for income. Growth