Why are bonds less riskier than stocks?
In: Economics
They are very different things.
A bond is like a loan, and you are one of the lenders. The bond issuer is borrowing money from you, and promises to pay it back with a set interest rate. Unless something happens to the bond issuer, it’s almost a sure thing.
A stock is part ownership in a company. If that company looks like it is doing well and will continue to do well, the value of the stock tends to go up because other people are eager to buy them from you. But if the company doesn’t do well, the value of the stock can drop and you can lose money.
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