Equities

Equities are financial instrument. Public companies sell their ownership in the form of equities. You can buy them from a stock market or it can be bought via the Initial Public Offering (IPO) route, directly from the company. Equity is a good long-term investment option as it offers higher returns than most other investment avenues in the long run. But along with the possibility of greater returns, there is also comes greater risk involved to losing your entire invested fund, as financial markets are volatile in nature.

Bonds

When you buy bonds, the issuer of the bond becomes indebted to you. Bonds are debt security, which are issued by companies, financial institutions, and the central or state government and other government institutions for the purpose of raising capital. These bonds are are a form of loan under which the issuer owes you a debt, and promises to pay interest on particular periods and to return the principal amount after a fixed period (at the time of maturity of the bond).

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