Sometimes it’s very hard for a newcomer to the world of finance to understand the difference between the two. The first thing that comes to mind is “stocks are riskier than bonds”. Basically it’s true. Potential stock profitability is higher. So as risk.
Stock means “ownership” of the company. The price of the stock will depend on actual performance of the company and may fluctuate.
Bond means “credit” given to the company. The percentage the investor gets is fixed.
If we think of an ideal portfolio for the investor, it should, probably, consist of the two.
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