Investing 6 min read

Stocks, bonds & funds

When you buy a stock, you own a tiny slice of a real company. Here's what you're actually buying.

Stocks: owning a piece

A share of stock is a small ownership piece of a company. If the company grows and earns more, the share usually becomes more valuable.

Some companies also pay dividends — a share of profits sent to owners.

Bonds: lending money

A bond is a loan you make to a government or company. They pay you interest and return your money later. Bonds are usually steadier than stocks but grow less.

Funds: a bundle

A fund pools money from many people to buy lots of stocks or bonds at once. One purchase can give you hundreds of companies.

Mutual funds and ETFs (exchange-traded funds) are the two most common types.

Real example

Ella's $100

Ella, 17, has $100. She compares three ways to invest it.

1 company's stock: 1 company
A government bond: Steady interest
A total market ETF: ≈ 3,500 companies
Fractional shares: Buy $5 slices

Remember this

Stock = ownership. Bond = loan.
Stocks grow more but bounce more; bonds are steadier.
Funds bundle many investments into one.

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