http://www.zecco.com/blogs/russ_bailyns_blog/The-Difference-Between-Stocks-and.aspxMany people don’t understand the differences between stocks and bonds. It occurred to me recently that even those who invest in these types of securities through either personal investment accounts or retirement plans can’t really articulate what theen-USZeccoServerhttp://www.zecco.com/blogs/russ_bailyns_blog/The-Difference-Between-Stocks-and.aspx#1415Sat, 21 Oct 2006 04:02:15 GMT67055c26-3fef-46fb-bf95-b7f879c3a598:1415DracolithDon't forget that even if you do see all your payments and principal, on schedule, bonds can be risky too, due to the variability of interest rates over time.   If you buy a long-term bond when interest rates are at historic lows, say to a federal funds rate of 2%, then interest rates rise, say to the rate 15%, and stay high until maturity of the note, in terms of real money, your bond has become much less valuable just like some shares of stock can become less valuable, after considering the effects of taxation and inflation, your return is negative, you've lost money in real terms, even though the number of dollars is greater than you started with.