# 🍈 Fruits and Veggies

By [Let Them Eat Cake](https://paragraph.com/@ltecake) · 2022-06-18

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**TL,DR: Stocks and Bonds are the building blocks of a healthy investment diet.**

**Fruits / Stocks**

Like fruits, stocks can be succulent and sweet or bitter and sour, carrying more risk and reward than other investments.

**What’s in a Name?**

No one knows for certain why ”stock” represents shares in a company, although some theories suggest stock reflects the material used in the hull of a boat, or from the trunk of a tree. Stocks were first traded at a shipping port in Denmark - so wooden boats are fittingly linked to the terminology.

**About the Product**

Stocks represent equity or shares issued by a company which provide partial ownership. The company’s worth is associated with the price of its shares, which means the shares can grow in value or plummet, depending on the company’s performance and demand for partial ownership. If the company goes bankrupt, the stockholders, as called shareholders, will receive money back only after all other financial obligations are met, including any outstanding debt payments.

**Veggies / Bonds**

Like veggies, bonds can be bland and predictable, and are typically consumed by the more responsible investors with an aversion to risk. However, some veggies can suprise, with bold flavors and substantial risk.

**What’s in a Name?**

“Bonds” reflect the binding nature of the investment product. Unlike a stock, which involves no financial commitments other than an ownership percentage (ignoring dilutions), bond issuers are obligated via a binding contract to pay bond holders the  agreed interest and principal amounts. 

**About the Product**

Bonds represent debt in the form of loans to an organization such as the government, a government agency, or a private company. If you buy a bond, you are essentially lending money to the issuing organization, and that org will pay you back over time, with interest. The payment typically involves a fixed interest rate, let’s say 5% of the overall price, every six months, which is why bonds are sometimes called “Fixed Income”. At maturity, which is like the product’s expiration date, the original amount paid for the product is returned to the holder as a principal payment. Bond buyers are typically looking to preserve their wealth and do not expect large returns.

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*Originally published on [Let Them Eat Cake](https://paragraph.com/@ltecake/fruits-and-veggies)*