How do stocks and bonds differ?
There are some similarities between stocks and bonds, but there are also many major differences. Starting with the legal construction, it is so that it concerns with the bonds to creditor papers, whereas against the shares fall into the range of the partner papers. In concrete terms, this means that when the bond is purchased, the investor becomes the issuer's creditor and the issuer becomes the debtor. The investor has a right to repayment of the capital invested in the bond and the right to receive the agreed interest. In the case of shares, on the other hand, the buyer of the shares, henceforth also referred to as a shareholder, becomes a partner in the stock corporation with the purchase of the shares, i.e. quasi co-owner. However, this also means that the shareholder bears the entrepreneurial risk. He cannot claim that the capital employed is repaid in full, as is the case with the bond, but can only sell the shares again at the current market value. Shareholders are also not entitled to a fixed return, but only to a dividend if a distribution is decided. In return for the bond owner, however, the shareholder can participate in or influence the business decisions of the AG. This takes place within the framework of the annual general meeting, at which each shareholder can exercise a voting right according to the shares held. With stocks as well as bonds, the investor bears an issuer risk. If the issuer of the bond is insolvent, the customer's invested money is usually just as lost as if the stock corporation had to file for bankruptcy, because in this case, too, the shares are usually worth next to nothing. Nevertheless, the risk of loss with stocks is usually significantly higher than with investments in bonds (except for some very speculative foreign or currency bonds) due to further risks (above all the price risk), but on the other hand, the chances of profit with stocks are average significantly higher than with bonds.
Go to the bonds tutorial To the broker comparison
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