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What is the difference between shares and bonds?

What is the difference between stocks, shares, bonds, and trusts?

  • Answer:

    1. Stock simply means, holding ownership of any company. E.x. " i am holding stocks" Explanation: it represents the ownership of any number of company. 2. Share means holding ownership of particular company E.x. " i am having a share of xyz company" Explanation: it represents the ownership of the particular xyz company. 3. Bonds (aka Notes): Bonds represent a loan you make to a corporation or government. For example, you can buy a US Treasury bond for $100, and get a guaranteed interest rate for 5-years, and can expect to get your $100 back at the end of that 5-years plus interest. 4. Trust funds are arrangements that allow individuals to create sustained benefits for another individual or entity. Parents sometimes establish a trust fund to provide some degree of financial security for their children, A trust fund can also be established to benefit a charity or other non-profit organization.

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In most cases I think stocks and shares probably mean the same thing. Stock is a small ownership share of a company. One share of stock represents one fractional piece of the company. If the company has issued 1 million shares then one share represents 1/1000000th of the company (generally, though there are some cases where it's different). When you buy shares of stock you are taking ownership of a piece of the company. When you buy a bond, you are essentially making a loan to the company. They will pay you interest on the bond (loan) for a set period of time, then return the original value of the bond. With a bond, you do not own part of the company, but are a creditor. Trusts are basically legal entities set up to legally do something the grantor of the trust wants to do. That could be avoiding taxes, avoiding a list of their assets made public when their will is settled, controlling how their heirs are able to receive their inheritance, or perhaps some other reason. Trusts will usually contain assets like stocks, bonds, savings accounts, etc. but a trust in and of itself is just a legal entity.

Dave W

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