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Let’s zoom in on the two major types of securities: stocks and bonds. Stocks, also known as equities, represent ownership in a company. When you buy a stock, you become a shareholder, and you have a claim on a portion of the company's assets and earnings. The value of your stock can increase (or decrease) depending on the company's performance, industry trends, and overall economic conditions. There are different types of stocks, such as common stock (which gives you voting rights) and preferred stock (which often has a fixed dividend payment). Bonds, on the other hand, represent debt. When you buy a bond, you're essentially lending money to the company (or the government). The company agrees to pay you back the principal amount (the original loan) plus interest over a specific period. Bonds are generally considered less risky than stocks, as they have a fixed income stream and are prioritized in case of bankruptcy.
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