Can you simplify stocks & bonds?

Stock: • When you buy stock in a company, you buy a pepper flake on a pizza. Unless you’re Warren Buffett, you don’t ever own a meaty slice of the pie. But point is, you buy a tiny ownership because you’re betting on its future growth • So a stock MARKET…is a place (not a physical place, more like a digital marketplace - think Ebay where people bid on items and the “market” determines the price) where you buy/sell stocks of hundreds of companies • And companies SELL THEIR STOCK because…they can use your money to grow. If they do well, the stock price goes up. You can then either hold on to that stock if you think its growth will

Bond: • When you buy a bond, you lend money (to a company or even government). So the bond is like an IOU that you hold on to, and can buy/sell the IOU like a stock • What you get paid back is the principal (when the loan is due) + coupons (along the way) • *jargon* Principal = the amount you originally lent them. Coupon = the interest payments of the loan. • So the RISK is...the company or government goes bankrupt and can’t repay the IOU. Rare with safer bonds (there are agencies that rate ⭐️⭐️ the quality of a bond). Bonds generally are less risky than stocks because even when companies struggle and their stocks go down, they have cash to repay loans