Stocks make you a part-owner of a company, bonds make you a lender. Learn how each one earns money, what can go wrong and how to combine them.
In short
With a stock you own part of a company; with a bond you lend money to the issuer.
Stocks can pay dividends and rise in price, but they can also fall a long way.
Bonds pay a set coupon and return the face value at maturity, but carry credit, rate, inflation and liquidity risk.
If the issuer fails, lenders are paid before shareholders.
Many investors hold both; the mix depends on when you need the money and how much loss you can bear.
Start with a free Finmind account
It adds the market-wide order book and a practice simulator. Essentials, paid once, adds portfolio tracking from your broker's statements and orders through your own brokerage account. Premium adds valuation, the tax declaration and stop-loss orders.
What asset allocation is, how goals, time horizon and risk capacity shape your mix of cash, fixed income and shares, and what it means on the Uzbek market.
Stocks and bonds are the two building blocks most investors start with. On the «Toshkent» Respublika fond birjasi (UZSE) you can find both: shares of Uzbek companies and bonds issued by companies and other borrowers. They are often mentioned together, but they work in very different ways. This guide explains what each one is, how you can earn money from it, what can go wrong, and how people use the two together.
A stock (a share, or aksiya in Uzbek) is a small piece of ownership in a company. If a company has issued one million shares and you own one thousand of them, you own one tenth of one percent of that business. As a shareholder you usually get a vote at the general meeting of shareholders and a claim on part of the company's profit.
You can earn money from a stock in two ways:
Dividends. When a company makes a profit, its shareholders can decide to pay part of it out as dividends. Dividends are not promised: a company can reduce them, skip them or never pay them.
Price growth. If the company grows and investors value it more highly, the market price of the share can rise. You only turn that gain into money when you sell.
Both can also go the other way. A company can have a bad year, the share price can fall below what you paid, and in the worst case a company can fail and its shares can lose most or all of their value. Shareholders are paid last: if a company is wound up, its lenders, including bondholders, have a claim before the owners.
Some companies also issue preferred shares. These usually have a priority right to a dividend set in the company's charter, but often fewer voting rights than ordinary (common) shares. The exact terms depend on the issuer, so read them before you buy.
What a bond is
A bond (obligatsiya) is a loan that you make to the issuer. The issuer might be a company, a bank or a government body. In return, the issuer promises to pay you interest, called the coupon, on a fixed schedule, and to repay the face value (the nominal amount) of the bond when it matures.
Here is a simple, hypothetical example. Suppose you buy a bond with a face value of 1,000,000 soʻm, a coupon rate of 10% a year and three years left to maturity. If everything goes to plan, you receive 100,000 soʻm of coupon each year (before any tax) and your 1,000,000 soʻm back at the end. These numbers are only an illustration, not a real bond.
Bonds are usually more predictable than stocks, but they are not risk-free:
Credit risk. The issuer may be late with a payment or fail to pay at all. A bond is only as reliable as the borrower behind it.
Interest rate risk. If interest rates in the economy rise after you buy, new bonds pay more, so the market price of your older bond tends to fall. If you need to sell before maturity, you may get less than you paid.
Inflation risk. A fixed coupon buys less when prices rise quickly.
Liquidity risk. Some bonds trade rarely, so finding a buyer at a fair price can take time.
The easiest way to remember the difference is: with a stock you are an owner, with a bond you are a lender. That one fact explains most of the other differences.
What you receive. A stock may pay dividends that change from year to year. A bond promises a coupon set in its terms.
Upside. A stock has no ceiling on how much it can grow. A bond's best case is usually receiving all coupons and the face value back.
Downside. A stock price can swing widely. A bond price usually moves less, although a bond can still lose value if the issuer gets into trouble.
Time limit. A stock has no maturity date: you own it until you sell. A bond has a maturity date when the principal is due to be repaid.
Priority. If the issuer fails, lenders are paid before shareholders.
Control. Ordinary shares usually carry votes. Bonds do not.
None of this makes one better than the other. They do different jobs.
Owner or lender
Stock
You own part of the company
Dividends may change from year to year
No ceiling on growth, and the price can swing widely
No maturity date
Paid last if the issuer fails
Ordinary shares usually carry votes
Bond
You lend to the issuer
A coupon set in the bond's terms
Best case: all coupons and the face value back
A maturity date when the principal is repaid
Lenders are paid before shareholders
No votes
How investors use both
Because stocks and bonds react differently to the same events, many investors hold both. Stocks are the part of a portfolio that is expected to grow over long periods, with bigger ups and downs along the way. Bonds are the part that is expected to produce steadier income and soften the swings.
How much of each you hold depends on your own situation:
Time horizon. Money you need in a year or two is usually not a good fit for stocks, because prices can be down just when you need to sell. Money you will not touch for many years can ride out more ups and downs.
Tolerance for losses. Ask yourself honestly how you would feel if part of your investment fell by a third for a while. If you would sell in a panic, a calmer mix may suit you better.
Income needs. If you want regular payments, coupons and dividends matter more than price growth.
A hypothetical example: an investor saving for a goal many years away might hold mostly stocks, while someone who needs the money soon might lean towards bonds and deposits. This is an illustration of the reasoning, not a recommended split. Spreading money across different assets and issuers is called diversification, explained in diversification and risk.
Before investing at all, it also helps to have an emergency fund in cash, so you are never forced to sell at a bad moment. See emergency fund and budgeting.
How to look at stocks and bonds on UZSE
You can explore both types of securities on Finmind without a Finmind account. The stocks page lists shares traded on UZSE, with a page for each ticker, and the UZSE bonds page lists exchange-traded bonds with a page for each bond. Company disclosures, such as annual reports and notices of dividend decisions, are published on openinfo.uz.
If you want to get a feel for price swings before you commit real money, you can create a free Finmind account and practise buying and selling UZSE shares with virtual money in the simulator, or work through the free tutorials. When you are ready to buy for real, the steps are explained in how to buy shares in Uzbekistan.
Frequently asked questions
Bond prices usually move less than stock prices, and bondholders are paid before shareholders if an issuer fails, but bonds are not risk-free. An issuer can miss payments, rising interest rates can push a bond's market price down, and inflation can eat into a fixed coupon. How safe a bond is depends mostly on who issued it.
If the issuer makes every payment, you receive the coupons and the face value back, so price changes along the way do not matter to you. You can still lose money if the issuer defaults, and if inflation is high, the money you get back may buy less than when you invested.
No. Dividends depend on a company's profit and on the decision of its shareholders. Some companies pay regularly, some pay irregularly and some reinvest everything in the business. A dividend paid in the past is not a promise of future dividends.
Many investors hold both, in a mix that fits their time horizon, their tolerance for losses and their need for income. There is no single right answer, and this article cannot tell you what suits your situation. Learning how each one behaves, for example in a simulator, is a good first step.
This article is for education only and is not investment advice. Investing in securities involves risk, including the loss of money you invest.
Key terms in this post
Issuer
The company or government that issued a share or a bond and has obligations to its holders.
Face value
The amount the issuer repays when a bond ends, and the amount its coupons are calculated on.
Coupon
The interest a bond pays its holder, usually a fixed percentage of its face value, paid on set dates.
Maturity
The date a bond ends and the issuer pays back its face value.
Diversification
Spreading money across different investments, so that one bad result does not sink the whole portfolio.
Year
Government bond auctions, average yield per quarter, 2018 to 2026. Source: Uzbek Republican Currency Exchange. CBU refinancing rate, 2015 to 2026. Source: Central Bank of Uzbekistan. Each quarter's figure is the simple average of the weighted-average yields of that quarter's auctions. Read by Finmind on Sep 28, 2026.
