Question

Whare are stock vs bonds advantages and disadvantages?

Answer 1

Answer:

Buying stocks v/s bonds.

Stock and Bonds differ in their structure, returns and risks. Both have their advantages and disadvantages.

Advantages of buying stocks over bonds:
Stocks gives you the ownership in the company i.e. the return on the investment depends upon the rising stock prices which is determined the growth and profitability of the company.
Stocks are capable of generating higher returns as compared to the bonds. Investors who are risk takers and would prefer a partial or ownership in the company will always choose stocks over bonds.

Advantages of buying bonds over stocks:
As we are all aware that stocks are riskier than bonds therefore, for the investors who are risk- averse i.e. those who are reluctant to take risks, buying stocks is not a preferrable option because they look for safety of capital and with stocks, the possibility of losing money also exists. The biggest disadvantage of stock is that it does not guarantee you the return and on the other hand, bonds generally offer fixed returns through coupon payments.