What Are Stocks & Bonds?
It's really interesting to me, how many people have an investment portfolio but don't understand the difference between a stock and a bond. Because those are actually two fundamental pieces of most people's portfolios. They usually have both of those things in there in one shape or another.
Let me break it down simply for you:
A STOCK is a just a way to own a piece of a business - or a "share." It's equity in a business.
A BOND on the other hand is a way for you to lend money to a government or to a corporation.
So STOCK = OWNERSHIP and BOND = "LOANERSHIP" (That's not a word, I just made that up...but it works).
Stock equals own and bond equals loan, and most people's portfolios are made of a combination of those two things. Now really, the trick comes down to figuring out how much of your portfolio should be ownership and how much should be "loanership."
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