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What's the difference between etfs and bonds?
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Bonds are like IOUs, where you are lending money to the company in return for some interest i.e. the coupon payments. You typically get back your principal amount at the end of the period in SSB case is 10 years or when you decide to withdraw from it.
ETFs are exchange trade funds where investors pool the money with the ETF issuer to buy shares of companies. The list of stock holdings depend on what the ETF tracks. It is a form of investment where you buy a portfolio to stocks (based on the tracking and goal of the ETF issue) rather than one or a few stocks. As it is traded on an stock exchange, the price is determined by market demand and movements.
Bonds have a higher priority for repayment than common shares/stock, if the company does goes bankrupt.
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Bond is a type of debt instrument. An investor lends money to companies or governements and they are...
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A simple illustration will be this: you are lending money to a particular company and to recompensate you, you will get your money back, alongside interest. This is how bonds work, in essence. In the case of SSB, you are lending money (in that sense) to the government. It is very safe, extremely low risk.
ETFs (Exchange-Traded Funds) are basically a pool of money used to invest in different companies. And the interesting about ETFs is that it can be bought and sold (exchanged) like a stock. ETFs tracks the stock market closely, eg. If you buy the Vanguard S&P500 ETF, you are tracking the S&P500 index. That index, by the way, is a good representation of the stock market in the US.
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