What’s the Difference Between a Stock and a Bond?
Stocks and bonds are very different investment vehicles. But investors don’t always know what they are. In simple terms, stock is a tiny piece of a company that you are buying. When you buy stock, you own part of the company you are investing in. Bonds are debt instruments. When you buy a bond, you are lending the company money, which the company promises to repay.
An even bigger difference between stocks and bonds is how the investor makes money with them. You can make money with stock if the stock pays dividends, and/or if the stock goes up in value, although that increase in value is only on paper unless you sell the stock at the higher price.
Bonds pay a fixed rate of interest to the bond owner. You are lending a company money, and the company pays you interest on the loan. Bonds have different ratings based on how likely that company is to pay you back. Bonds that are riskier will pay a higher rate of interest.
Investing is complicated. That’s why it’s valuable to have an experienced professional to help you with your investing. If you need some help with your investing, Noah Belcher would be happy to talk to you.
Noah Belcher is an Investment Advisor with Industrial Alliance Securities Inc., and is a CERTIFIED FINANCIAL PLANNER® professional and a Chartered Investment Manager (CIM®), who help his clients achieve their financial goals and objectives. He offers personalized solutions and stellar customer service to clients with complex tax profiles who require top-notch advice.
If you have any questions about this article or would like to talk to Mr. Belcher about your financial profile, call his office at (604) 535-3454.
This information has been prepared by Noah Belcher who is an Investment Advisor with Industrial Alliance Securities Inc. Opinions expressed in this article are those of the Investment Advisor only and do not necessarily reflect those of Industrial Alliance Securities Inc. The information contained herein may not apply to all types of investors. Industrial Alliance Securities Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.
