What is the difference between stocks and bonds

Stocks and bonds — two fundamental instruments of the stock market, but in essence, they are completely different rights: a stock makes you a co-owner of the company, a bond — its creditor.

What you are actually buying

When you buy a stock, you obtain a share in the company's capital: the right to a portion of the profit (if it pays dividends) and the right to vote at shareholder meetings. When buying a bond, you are essentially lending to the company or the government at interest — the issuer is obliged to return the principal amount by a specified time and pay coupon income, regardless of how the business is doing.

Income: variable versus fixed

Stock income is not guaranteed and not fixed — it consists of price growth and possibly dividends, the size of which the company can increase, decrease, or cancel. Bond income, on the contrary, is known in advance: the coupon rate and maturity date are stipulated in the issuance terms — that's why bonds are called fixed income instruments.

Risk and priority of payments

In case of issuer problems or bankruptcy, bondholders receive payments before shareholders — this makes bonds on average a less risky instrument. Stocks, in turn, offer a higher potential for value growth, but also higher volatility: the price can increase several times or drop.

What to choose

This is not a question of “which is better” — stocks and bonds serve different purposes in a portfolio: stocks are often used for capital growth on a long horizon, and bonds — for stability and predictable income. Many investors hold both instruments simultaneously, determining the proportion based on their goals and risk tolerance. Both instruments are available through the “Stock Exchange Broker” catalog.

The material is for informational purposes and does not constitute an individual investment recommendation. Past investment results do not guarantee future returns.