Bonds vs. Stocks: A Beginner’s Guide
Stocks vs. bonds
The main difference between stocks and bonds is that stocks give you a small portion of a company, while bonds let you loan a company or government money. Another difference is how they make money for you: Stocks must grow in resale value so you can sell them for more than you bought them, while bonds pay you fixed interest over time. Stocks also tend to generate more money as an investment than bonds.
Stocks
Stocks represent partial ownership, or equity, in a company. When you buy stock, you’re purchasing a tiny slice of the company — one or more “shares.” And the more shares you buy, the more of the company you own. Let’s say a company has a stock price of $50 per share, and you invest $2,500 (50 shares for $50…
