Lesson · 12 min
Stocks, bonds, and funds
The three building blocks of most portfolios.
A stock is partial ownership of a company. A bond is a loan you make to a company or government in exchange for interest. A fund (mutual fund or ETF) is a bundle of many stocks or bonds. Funds are how most people invest — one purchase, hundreds of companies.
Vocab
- ETF
- Exchange-Traded Fund — trades like a stock, holds a basket of assets.
- Index fund
- A fund that tracks a market index (e.g., S&P 500) at very low cost.
Quick check
1. An S&P 500 index fund gives you exposure to…