Investors are always told to diversify their portfolios between stocks and bonds, but what’s the difference between the two? Here's a look at the differences between stocks and bonds at the most basic level.

Stocks and bonds are two different ways for an entity to raise money to fund or expand its operations. Stocks are simply ownership shares of corporations. When a company issues stock, it is selling a piece of itself in exchange for cash NOTE: A person who buys a stock is buying an actual share of the company, which makes them a partial owner. That is why stock is also referred to as "equity" This applies to both established companies and IPOs that are new to the market.

Bonds represent debt