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Good day! In this video, I’ll discuss the difference between stocks and bonds. The difference between stocks and bonds is that stocks are shares of a company's ownership, whereas bonds are a type of debt that the issuing entity promises to repay at some point in the future. When you buy stock, you're buying a little piece of the company, the more shares you buy, the more of the company you own and investors get them in the form of stock certificates. Bonds however, there is no equity involved, nor are there shares to be purchased, and are not without danger because if the firm declares bankruptcy during the bond time, you will no longer get interest payments and may not receive your whole principle back. To create a good capital structure for a corporation, a balance between the two sources of finance must be reached. In the case of a company's liquidation, stockholders have the final claim on any remaining cash, but bondholders have a far higher priority, depending on the conditions of the bonds. As a result, stocks are a riskier investment than bonds. A company can choose to pay dividends to its shareholders, although it is normally required to pay very specified sums of interest to its bond holders on a regular basis. Some bond arrangements allow issuers to postpone or eliminate interest payments, however this is a rare provision because investors are less eager to pay for a bond if it has a delayed payment or cancellation clause. When it comes to voting rights, stockholders have the ability to vote on certain company issues, such as the election of directors, but bondholders do not. Now, how do you choose the best investment? It is critical to determine your risk tolerance before investing in bonds or stocks. Do not invest money you cannot afford to lose, and whatever you decide, it's worth considering a mutual fund, in which your money is pooled with others' and invested in a diverse variety of assets. That is the impact of a default in a bond fund or a drop in share price in an equity fund is reduced. Thank you for watching!