Stocks — Ownership with Upside (and Downside)

When you buy a share of a company, you own a small piece of it. If the company grows and becomes more profitable, your share price rises. If it struggles, your share price falls.

Key characteristics:

  • Returns are variable and market-linked.
  • No guaranteed payout (dividends are optional).
  • Historically, Indian equities (Nifty 50) have returned ~13–15% annually over long periods.
  • Suitable for long-term goals (5+ years).

    • Bonds — Lending with a Promise

    When you buy a bond, you lend money to the issuer (government or corporation) for a fixed period at an agreed interest rate. At maturity, you get your principal back plus all interest.

    Key characteristics:

  • Predictable income stream.
  • Government bonds carry near-zero default risk; corporate bonds carry some.
  • Returns are lower (6–9%) but more stable.
  • Suitable for capital preservation and short-to-medium term goals.

    • Key Differences at a Glance

    | | Stocks | Bonds | |---|---|---| | What you become | Part-owner | Lender | | Return type | Variable (capital gain + dividend) | Fixed (interest + principal return) | | Risk | High | Low to medium | | Best for | Long-term wealth creation | Stability, regular income | | Liquidity | High (exchange traded) | Medium (depends on bond type) |

    In a Portfolio

    Stocks and bonds are negatively correlated in many market environments — when stocks fall sharply, investors often flee to bonds, pushing bond prices up. This is why holding both creates a smoother portfolio journey.

    > Altius Tip: Think of stocks as the engine of your portfolio and bonds as the suspension system. Both are necessary for a comfortable, long-distance ride.