Stocks represent ownership in a company and offer potential for capital gains but come with higher risk. Bonds are debt securities, offering regular interest payments and lower risk.
In a diversified investment portfolio, stocks can provide growth potential, while bonds offer stability and income. The balance between these assets can be adjusted to align with an investor's risk tolerance and financial goals. Stocks tend to perform well in the long term but are more volatile, while bonds provide stability and income but may offer lower returns. Diversifying between stocks and bonds can help manage risk and optimize returns based on an investor's specific objectives and risk profile.
