Stocks vs. Bonds: Which Is Better for Your Goals?

Both stocks and bonds play important roles in an investment portfolio, but they serve different purposes. Understanding their strengths helps you align investments with personal goals.

Stocks represent ownership in a company. They offer higher potential returns but come with greater volatility. Over the long term, stocks typically outperform bonds, making them ideal for growth and retirement savings.

Bonds are loans you provide to governments or corporations. They pay interest and return principal at maturity, offering stability and predictable income. Bonds are less risky but generally provide lower returns.

The right mix depends on time horizon and risk tolerance. Younger investors can afford a heavier stock allocation because they have time to recover from downturns. Older investors, or those approaching retirement, often shift toward bonds to preserve capital.

The best strategy isn’t “stocks vs. bonds”—it’s diversification. A balanced portfolio reduces risk and positions you for steady growth.