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What are the Differences Between Stocks and Bonds?

In an effort to cast as wide of a net as possible, this blog will be addressing topics ranging from those for the beginner all the way to items for the expert when it comes to finance and wine. Today's lesson is on something that I have found many people say they know, yet if you were to ask them to explain it simply, they wouldn't be able to- the difference between a share of stock and a bond.

Stocks Are Ownership

Let's say Cindy owns a company that makes Widgets. Her company is doing well- she has a number of local and national accounts that are buying her products, her employees work hard and like their jobs, and things seem to be cruising right along. However, so she can be a player on the national and global levels, Cindy wants to grow her company much more quickly, and her current income stream won't allow her to do so. One way that she can raise capital (money) is to divide the ownership of her company into small pieces, and sell each one of them. In this instanc…

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