What's the difference between stocks and bonds?
Ownership vs. Debt: Stocks represent ownership in a company, while bonds are debt instruments issued by a company or government.
Returns: Stocks offer potential for higher returns through capital appreciation and dividends, whereas bonds provide fixed interest payments.
Risk and Reward: Stocks are generally riskier but can yield higher rewards, while bonds are considered safer with predictable returns.
Voting Rights: Stockholders often have voting rights in company decisions, while bondholders do not typically have such privileges.
Priority in Repayment: In case of bankruptcy, bondholders have higher priority in repayment compared to stockholders.
Market Volatility: Stock prices can be highly volatile, subject to market fluctuations, while bond prices are generally more stable.
Maturity: Bonds have a fixed maturity date when the principal is repaid, while stocks do not have a maturity date.