Risk and return

Stocks offer ownership in a business with unlimited upside but no guaranteed return — prices can fall as well as rise, and dividends can be cut. Bonds offer a defined, contractual return (coupon and principal) if held to maturity, with returns generally lower than what stocks can achieve over the long run.

Income predictability

Bond coupon payments are fixed and scheduled, making them useful for investors who want predictable income. Dividend income from stocks is less predictable and can change year to year.

Time horizon

Money you'll need soon is generally better suited to lower-volatility options like bonds or fixed deposits — a stock market downturn right before you need the cash could force you to sell at a loss. Money you won't need for many years can better tolerate the ups and downs of stocks in pursuit of higher long-term growth.

They aren't mutually exclusive

Most investors hold a mix of both, adjusting the balance based on age, goals, and risk tolerance — often holding a higher proportion of bonds as a goal (like retirement) gets closer.

A starting mental model

Stocks for growth over long horizons; bonds for stability, income, and capital preservation over shorter horizons or lower risk tolerance.