What Are the Similarities Between Stocks & Bonds?

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Both stocks and bonds are ways of raising money, with bonds being more like borrowing money, and stocks being more like selling a portion of a company. Find out how stocks and bonds can get easily sold with help from a licensed financial planner in this free video on the stock market and investing.

Part of the Video Series: Stock Market
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Video Transcript

Hi, my name is Bill Rae. I'm with Alumni Financial Services. I've been in the business and finance world for well over 20 years and today's question is what are the similarities between stocks and bonds? That is an excellent question. First of all, let me say to you that we're not here to solicit or to give investment advice. You need to sit down with a licensed professional. Now with that being said, the similarities between stocks and bonds I think we need to take a look and say what is a bond versus what is a stock. Both of them are a way of raising money. A bond would be more like borrowing money. A stock would be selling a portion of the company. So the similarities are we're looking to raise money, we need money, how do we get it? We go to you and ask for it. The other similarities between stocks and bonds is they can, they're pretty liquid, they can usually be sold fairly easy. Now what are your returns on them? Well that depends upon a host of things. If you sell a bond too early, you might lose some interest. If you sell a stock at the wrong time, you may sell it at a loss, that's another similarity. There are many, many more similarities between stocks and bonds. So my advice to you is do your homework. Make sure you understand the language of this industry. Seek outside counsel. Talk with a licensed adviser. Make sure you understand what your risks level are. In other words, how can I sleep at night if I invest money? Am I comfortable risking my money? And in always, make sure you understand whatever contract or agreement you sign. What are the terms? What are the costs? How and when can I get my money back? My name is Bill Rae, I'm with Alumni Financial Services and as always we're here to help you build wealth.

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