Hello everyone, I'm here to open a pancake shop again. Let me first tell you the difference between stocks and bonds with a little story.

Suppose I want to open a pancake shop, and it requires a total of 100,000 yuan, but I only have 60,000 yuan on hand, which is not enough. So, I approached my neighbor, Old Wang, and said, "Brother Wang, I want to open a pancake shop, and so on and so forth." Brother Wang, being wealthy and generous, readily lent me 20,000 yuan and agreed to receive 5% interest annually as a return on his investment.

Now I have 80,000 yuan, which is still not enough. At this point, my friend Xiao Li heard that I was going into business and wanted to invest 20,000 yuan to join me in opening the shop, which would be considered his share of the business. So now we have a formal contract, and the shareholding ratio must be clearly stated.

Finally, the pancake shop is up and running. I contributed 80,000 yuan, and Xiao Li 20,000 yuan, giving him a 20% stake, while I have 80%. Therefore, 20% of the profits from the pancake shop every year will be distributed to Xiao Li.

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Both have invested 20,000 yuan, but where does the difference in their returns lie?

If, by the second year, I haven't repaid Brother Wang's money, I will have to give him 5% of 20,000 yuan as a return, which is 1,000 yuan.

If the pancake shop made a profit of 100,000 yuan that year, that money has nothing to do with Brother Wang, because Xiao Li's investment was in the form of a shareholding. So, 20,000 yuan of the profit would be distributed to him.

By the third year, the pancake shop couldn't continue its operations and only made 10,000 yuan before it closed down. I couldn't even repay Brother Wang's 20,000 yuan, but I had to continue paying him 1,000 yuan in interest until I repaid the borrowed 20,000 yuan.

My dear friend Xiao Li was not so fortunate. In the third year, when the shop made 10,000 yuan, he could only receive 20%, which is 2,000 yuan. However, the 20,000 yuan he invested was lost.

Now it's clear that Brother Wang's profit comes from the interest he receives after lending me the money, while Xiao Li's income varies with the performance of the pancake shop.It can be understood that what Old Wang purchased is an IOU between me and Old Wang, which is a bond. In simple terms, it is lending money to others and setting the interest rate in advance. Regardless of the business conditions, a fixed interest can be obtained upon maturity. Bonds are divided into three types: government bonds, financial bonds, and corporate bonds. The emphasis is on safety, stable returns, interest rates higher than bank deposits, but not too high.

What Xiao Li bought can be understood as stocks, which are high-risk and high-return. If there is a lot of profit, there will be a lot to gain; if there is little profit, there will be little to gain; if there is no profit, there will be nothing to gain. This is the simple difference between stocks and bonds.

Now let's talk about funds.

What is a fund? It sounds like it has something to do with money. There are two aspects:

First, in a broad sense, a fund is a certain amount of money set up for a certain purpose. In layman's terms, it is to achieve the goals of individuals, companies, or society by storing a large sum of money.

For example, the social security fund is set up to provide basic protection for working people; the housing provident fund is also set up to provide housing protection for workers and employees. These funds are understood as funds in a broad sense.

Second, in a narrow sense, the fund we often talk about with friends, "I bought which fund," usually refers to a financial product, called "securities investment fund."

Suppose I want to buy Alibaba's stock, which now costs more than 100 US dollars per share, but I only have 1000 yuan, which is not enough to buy even one share. I not only want to buy Alibaba's stock, but I also want to buy stocks or bonds of other companies, but there is no way to diversify my investments.

At this time, the securities investment fund comes into play. These are the funds that companies, insurance companies, or banks issue shares of, gather huge amounts of money from a large number of investors, form an investment management team, and create an independent investment portfolio product.

This portfolio may include various valuable vouchers such as stocks, bonds, futures, etc., and is managed by the fund management company or a professional fund manager to invest and profit through asset allocation.Here's an extreme example: even if I only spend 10 yuan to buy a share of a fund, that 10 yuan will be divided into different stocks, bonds, etc.

At this point, I can take out my only 1000 yuan to buy fund products. There are tens of thousands of people like me who invest their money into the fund company's pool of funds, and the money becomes more. The fund company can use the money in the pool to invest in stocks, bonds, etc. to earn profits and return them to investors.

Stocks and bonds are direct transactions, while funds are a form of entrustment and an indirect form of transaction.

Since the fund includes different investment products such as stocks and bonds, the risk and return rate are also different. Everyone's risk tolerance is different, so the types of funds are also increasing.

For example, according to the classification standards of the China Securities Regulatory Commission, if more than 80% of the fund's investment portfolio is placed in stocks, then this kind of fund is called a stock fund; if more than 80% of the fund's assets are invested in bonds, then this kind of fund is called a bond fund.

Before buying a fund, investors need to take a risk assessment test, and investors can choose different types of funds through preferences.

Suppose my risk assessment is conservative, and the risk tolerance is slightly lower. I spent 1000 yuan to buy a low-risk fund. Then, the investment portfolio of this fund may have 10% high-risk stocks, 10% mixed funds, 10% money market funds, and the proportion of bonds may be greater than or equal to 50%.

Fund companies generally help customers choose different fund products according to their different risk tolerances, or adjust the proportion in the fund portfolio to achieve the corresponding risk tolerance.

So this ratio varies from person to person, there is no fixed ratio, as long as you can sleep peacefully.