african-american-man-looking-at business-news

What’s the Difference Between Stocks and Bonds?

When diversifying your portfolio, you’ll read article upon article about stocks and bonds. They’re referenced together so often that they’ve become synonymous to those who are unclear of the differences. However, understanding how they differ can help you to choose which assets best fit your needs. In this article, we’ll share details on each to give you insight into how these two instruments contribute to diversification. 

The Characteristics of a Stock

So, let’s take a look at the characteristics of a bond to see how they compare.

The Characteristics of a Bond

Why These Differences Are Important

Stocks and bonds are both means of raising funds for an entity—but the way they raise those funds is what you must pay attention to when diversifying. Overall, when it comes to your portfolio, it’s crucial to acknowledge that stocks have a considerable amount of risk, whereas bonds are usually much safer investments. 

This does not mean that one is better than the other; it all depends on your risk tolerance. Depending on several factors, such as your age and financial goals, you and your advisor will determine the number of stocks and bonds that you should invest in.

Need Help Navigating Your Stocks and Bonds?

Do you need help diversifying your portfolio based on your risk tolerance and financial goals? Contact us today to schedule a consultation.

Legal Disclaimer

More Articles

  • The Nashville Tennessee Skyline


    June 22, 2020

    FRANKLIN, Tennessee—Southwestern Investment Group, an independent wealth management company, is excited to

    Read More

  • happy-asian-mother-and-daughter

    How Old Should a Child be Before Having a Life Insurance Policy?

    March 3, 2021

    Life insurance can be an uncomfortable topic of conversation, especially when it

    Read More

  • Franklin Southwestern Investment Group Mark Deering Forbes Top Advisors List 2016

    Mark Deering Named to Forbes’ List of Top Wealth Advisors

    March 21, 2019

    The list recognizes advisors from national, regional & independent firms.

    Read More

< Back to Resources