Stocks, ETFs, and Bonds: The Simple Difference
Finance · English · Portrait · 1 min · whiteboard animation
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Transcript
What’s the difference between stocks, ETFs, and bonds?
First, stocks.
When you buy a stock, you own a small part of a company. You can make money if its share price rises, and some companies also pay dividends. But prices can fall too.
Next, ETFs.
An Exchange-Traded Fund holds a basket of investments. Instead of buying 50 stocks separately, you can buy one ETF that tracks them. ETFs can hold stocks, bonds, gold, and other assets. You make money if their value rises, but returns aren’t guaranteed.
Finally, bonds.
When you buy a bond, you lend money to a government or company. You may receive interest payments and get your principal back at maturity, depending on the bond’s terms. Bonds also carry risks.
Remember:
Stocks = Ownership. ETFs = A basket of investments. Bonds = Lending money.
Choose your mix based on your goals
That’s the Logic Behind the Wealth