Introduction
When it comes to building a successful investment portfolio, one of the key decisions that investors need to make is how to balance stocks and bonds. Stocks and bonds are two of the most common asset classes that investors can own, and they have different characteristics and risks. Finding the right balance between the two can help investors achieve their financial goals while managing risk.
Understanding Stocks and Bonds
Stocks
Stocks, also known as equities, represent ownership in a company. When you buy shares of a stock, you become a partial owner of that company. Stocks provide investors with the opportunity to participate in the company’s growth and profit through capital appreciation and dividends. However, stocks are also subject to higher levels of volatility and risk compared to bonds.
