Stocks and bonds are like special tickets that grown-ups use to help companies and governments. 🎟️
When you buy a stock, it means you own a tiny piece of a company, like having a little piece of a big pizza! 🍕 If the company does well, your piece might become more valuable.
When you buy a bond, it's like lending money to a company or government. They promise to pay you back later with a little extra, like when you lend a toy to a friend and they give you a sticker in return! 🏛️
Stocks are tiny pieces of a company that people can buy. If the company makes money, the stock might go up in value! 📈 You can even get paid a little money called a dividend just for owning it.
Bonds are like IOUs. When you buy one, you're lending money to a company or government. They promise to pay you back with interest (extra money) after a certain time. 💰
Stocks are riskier but can grow more, while bonds are safer but grow slower. People often mix both to balance their money!
Stocks (Equities): Buying a stock makes you a partial owner of a company. Your investment grows if the company succeeds (stock price rises or pays dividends). However, if the company struggles, the stock value may drop. 🏢
Bonds (Fixed Income): Bonds are loans you give to entities (governments/corporations). They pay fixed interest over time and return the original amount at maturity. Bonds are lower risk but offer smaller returns compared to stocks. 📉
Key Differences:
Investors often diversify by holding both to balance risk!