What is the difference between a stock and a bond?
Stocks
When you buy a stock, you become a part-owner (shareholder) of a company.
Your returns depend on the company’s performance—if it grows, the stock price rises, and you may also earn dividends (profit-sharing).
Stocks have higher risk but also higher return potential in the long run.
Bonds
A bond is a loan you give to a company or the government in exchange for fixed interest payments over time.
At the end of the bond’s term (maturity), you get back the original amount you invested.
Bonds are generally considered safer than stocks but offer lower returns.
In short, stocks give you a stake in a company, while bonds make you a lender to a company or government. Stocks have higher risk and reward, whereas bonds offer stability with fixed returns.
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