What's the exact difference between stocks and bonds?

Aren't they both helping you invest in a company? What's the difference between the 2? Which investment would be better? Whats the pros and cons to each type?

Discussion (5)

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Frankie Rappaport

05 Mar 2020

Bonds traditionally were seem as a lower risk investment category to bring stability into portfolios.

The assumption that bond prices are not well correlated with stock market prices instantaneously could be challenged. With occasionally even negative interest rates who knows what is still valid today?

There are also discussions of imminent threats to bond investing:

https://fortune.com/2019/12/29/financial-crisis...

On the other hand bonds are still discussed as advantageous:

https://www.etf.com/sections/daily-hot-reads/ho...

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Hariz Arthur Maloy

05 Mar 2020

Independent Financial Advisor at Promiseland Independent

Do you want to OWN the company or the company to OWE you.

Owning a company would mean buying equity or shares of the company.

For the company to owe you, you have to buy their bonds. They borrow money from you and guarantee to pay principal plus coupons (if any) during the period of the bond term.

A company raises money both ways. When they issue shares, they're raising capital in exchange of ownership, and they don't need to pay you back (figuratively speaking). When they issue bonds, they don't dilute their ownership but instead create debt that they have to pay back.

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