Traditional Culture Encyclopedia - Traditional culture - Why are stocks riskier than bonds?
Why are stocks riskier than bonds?
The risk of stocks is greater than that of bonds, and the expected return is higher than that of bonds. Bond risk mainly lies in default risk (bond issuer can't repay the principal and interest on time), interest rate risk (interest rate rises, bond price falls) and purchasing power risk (inflation leads to the decline of currency purchasing power). Generally speaking, bonds are less risky and relatively stable.
Stock risk mainly comes from the decline of stock price. When the stock price falls, investors will lose money and the stock fluctuates greatly. Generally speaking, stocks are more risky.
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