What Stocks Are

Stocks are pieces of company ownership and of that company's profits. Certain types give the stockholder power to cast votes in regards to company matters.

What Bonds Are

Bonds are promissory notes. That means a government or corporation borrows money from a bondholder, and it pays that money back to the bondholder over the life of the loan, at fixed interest rates.

Types of Stocks

The two most common types of stock are referred to as common and preferred. Both afford the holder a piece of that company. Common stock pays no dividends to the shareholder. Preferred stock does pay shareholder dividends.

Types of Bonds

Two particular bonds are Treasury bonds and savings bonds. Treasury bonds are a type of U.S. government debt security with higher rates of return. Their face values are $1,000 or greater. Savings bonds are another form of U.S. government debt, bought for less than $1,000, but with often lesser rates of return.

Expert Opinion

If financial risk is tolerable, then company stock has the highest potential for monetary gain, according to www.russell.com. However, Treasury bonds are one of the safest forms of investing because they are typically backed by the "full faith and credit" of the U.S. government, and are not dependent upon company profits.

Source:

Russell Bailyn: Stocks and Bonds

United States Treasury: Savings Bonds

WF Hummel: Stocks and Bonds