Comparison: Stocks vs Bonds for Kids and Beginners – A Simple Explanation

Stocks vs Bonds: Stock Market 101: Easy Peasy Finance for Kids and Beginners

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Introduction to Stocks vs Bonds for Kids and Teens

This video provides a stocks vs bonds comparison in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about the differences and similarities between stocks and bonds, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.

Suitable for students from grade levels:

• Kindergarten
• Elementary School
• Middle School
• High School

The topics covered are:

• Differences between stocks and bonds
• How do you make money from stocks and bonds
• Stocks vs bonds – differences in investing in each
• What happens when a company goes bankrupt

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Infographic: Click Here to Download

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What is the difference between a stock and a bond?

Well, if you own the stock, then you own part of the company. But if you own a bond, you make a loan.

But how do I make money from stocks and bonds?

With stocks, you get a share in the profit of the company through dividends. And you also get a share in the growth of the company through an increase in the price of the stock.

And with bonds, you get interest on the money that you lend, and you get the principal amount back at the end of the term.

But how is stock investing different from bond Investing?

Well, with a stock you own part of the company. So get a say in some of the things that the company does through voting.

You also take up risk – if the company does well, you can earn from the increase in the stock price and dividends. But if the company does not do that well, then you do not make any money.

But with a bond, you make a loan to the company, so you have very little risk. That way, you earn irrespective of whether the company does well or not.

But what happens if a company does really, really, really badly?

What if a company goes bankrupt?

Well, if a company were to go bankrupt, than the stockholders or people who own the stocks, would lose all of the money that they invested because stock price would crash.

But bondholders would be paid using the money that was obtained from the sale of the assets, like land and factories.

Thank you very much for telling me what the difference between a stock and a bond is, Wall Street Willy.

You’re welcome, Sooper Cooper. Remember, finance is your friend!

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Download Transcript: Ideal for Use by Teachers in their Lesson Plan to Teach Kids & Teens

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Podcast: Stocks vs Bonds