---

source

---

It is very important to know the differences between bonds and stocks, because they really are two totally different assets. In finance, both the bond and the stock are considered financial assets. We will explain what each of them consists of and then we will look for similarities and differences between the two.

Bonds

When we buy a bond we give a quantity of money to the issuing entity of the voucher that promises to return it to us at the end of the established term together with a percentage of interest (the benefit that we will obtain from this operation). The company issues that debt through bonds so that the general public can buy it. A feature that makes bond issuance almost exclusive to large companies.

With bonds you will not directly benefit from the success of the company. Instead, you will receive a fixed rate of return on your bond. So it does not matter how the company performs, you will receive the fixed rate of return.

The safest type of bond is a treasury bond, this type of bond is backed by the U.S. government.

---

source

Stocks

When acquiring stocks we are obtaining the category of partner, contracting some rights and obligations. Our decision-making capacity will depend on the percentage of the share capital that our shares represent. If the company obtains benefits, we can participate in them through the dividends received.

Stocks also confer political rights because, the shareholders have a voice and vote in the meetings that approve the company's policies. As with bonds, you can decrease the risk of stock trading by choosing your stocks carefully, assessing your investments and weighing the risk of different companies. Obviously, an entrenched and well-known corporation is much more likely to be stable then a new and unproven one. And the stock will reflect the stability of the companies.

---

@leviatan7

Reference 1
Reference 2