why is a high-quality bond typically considered a lower-risk investment than a stock?

In this article, We help you to know why is a high-quality bond typically considered a lower-risk investment than a stock - Mini invest.

why is a high-quality bond typically considered a lower-risk investment than a stock?

Do you know why the stock market is known as a high-risk investment? Because In the stock market there are no fixed returns on the investment. The return can be positive or negative. That's why the stock market is known as a high-risk investment. 

However, The stock market is the favorite sector for the people of the risk countries like the United States of America, the United Kingdom, Canada, France, India, and many countries people choose the Share market for Investment. While the investment in the share market depends on you. Do investment on your risk. The Mini invest is not responsible for anything.

Let's come on point why is a high-quality bond typically considered a lower-risk investment than a stock. We can understand the given points below. 

1. In the stock, they are many up and down there is no fixed return on the investment. It can be negative in the stock market. on the other hand, The bond pays the fixed returns on the investment. However, You get the returns at the end of the year. It is safe, easy, and secured to invest in bonds that are the reason the bonds are known as the lower-risk investment.
2. The returns are fixed. So at the top of the year, you get whatever interest - 7–8% is promised. There no such promised returns for stock investors.
3. Bonds accompany terms, like 5 years. So at the top of the 5 years term, you get you invested a refund. Again equity investors don't have such luxury. Suppose someone invested available at Rs 100 and therefore the end of 5 years it's trading at Rs.70. One can sell at 70 only taking a loss on capital. Also remember, bondholders received interest per annum. Equity investors don't unless there was a dividend paid by the co.
4. If the business goes wrong and therefore the company is forced to finish up by selling its assets, bondholders get the primary right and equity holders, the last. As long as some money is there, bondholders will get paid, but equity investors lose their entire investment in most cases.

However, I need to say the above facts must not deter someone from investing in equity. If one invests wisely in stocks of excellent company and good business, with good diversification and patience, it can generate extraordinary returns over time, which isn't possible with bonds. They hardly beat inflation.