What is the difference between a stock and a bond, and how do each of them contribute to an investment portfolio?

A stock represents ownership in a company, giving shareholders a claim on its assets and profits. Stocks can offer high returns through capital appreciation and dividends, but they come with higher risk due to market volatility. Stocks are generally used in an investment portfolio to provide growth potential over time. A bond, on the other hand, is a debt instrument issued by a company or government. When you buy a bond, you are lending money in exchange for periodic interest payments and the return of the principal amount at maturity. Bonds are considered safer than stocks because they offer fixed returns, but they usually provide lower growth potential. They contribute to an investment portfolio by providing stability and regular income, especially in periods of economic uncertainty. Both stocks and bonds play complementary roles in an investment portfolio by balancing risk and return, with stocks offering growth potential and bonds offering income and safety.