Why should we invest in bonds rather than stocks as we get older?
A bond is a debt obligation, such as a savings bond in the United States, that borrows money from investors to fund projects such as roads or for defence purposes.
A stock is an ownership interest in a corporation, so if the firm makes money or develops new discoveries, services, or goods that sell well, the stock price rises or a dividend is given out.
In general, the investment strategy is to raise your bond proportion as you get older, especially as you get closer to retirement, because it’s money you can’t lose.
Bonds are debt obligations that have a stronger likelihood of being repaid (otherwise no one would invest in the firms) than equities, which fluctuate based on the economy and how well a company’s revenues are performing.
Bonds, too, carry risk; invest only in the finest firms and countries. Best wishes!
Bonds are when you lend money to a corporation.
Stocks represent a portion of the company’s ownership.
Bonds are safe as long as the corporation can pay them back, so if you invest in high-quality bonds, you should be able to sleep soundly as you age.
Bonds are similar to FDs in certain ways.
Even if the interest rate is lower, the capital and interest are guaranteed.
However, it is dangerous with stocks since you are unsure of your capital protection.
That is, if the stock falls in value and you sell it, you will lose money.
I hope this answers your question.
Bonds are debts owed to you by the corporation. It’s a loan.
When you buy stock, you are purchasing a piece of the firm.
Bonds are a more secure investment.
