When you purchase a stock, you're buying a microscopic stake in the company. It's yours and you get to share in the growth and also in the loss. On the other hand, a bond is a type of loan. When a company needs funds for any number of reasons, they may issue a bond to finance that loan. Much like a home mortgage bonds are secured by some asset like land or property, but unlike mortgages, bonds can be purchased from someone other than the original borrower. If the borrower fails to pay on the loan (the principal), you don't get to live in their house; instead, your ownership of that bond transfers over to someone else who does pay them on time.
Bonds are a great way to diversify your portfolio and add a layer of protection if you think the market is going to take a downturn. Bonds can offer very high rates as well, as long as you're up for potentially locking your money up for a period of several years at a time. Just like with stocks, it's important to do your research before investing in bonds. For more detail, please refer to the info-graphic below.
