What are the key differences between stocks and bonds as investment options?

Stocks and bonds are two primary types of investments, each with distinct characteristics. Stocks represent ownership in a company. When you buy stock, you own a small portion of that company, and your returns come from dividends (if offered) and capital appreciation (if the stock price increases). Stocks tend to be riskier because their value fluctuates based on the company's performance and broader market conditions, but they also offer the potential for higher returns. Bonds, on the other hand, are loans made to governments or corporations. When you buy a bond, you're essentially lending money in exchange for periodic interest payments (coupons) and the return of the principal amount when the bond matures. Bonds are generally considered safer than stocks, though they offer lower potential returns. The risk varies based on the issuer's creditworthiness. In summary, stocks offer ownership and the potential for high returns with higher risk, while bonds provide regular income and lower risk.