<prompt> Human: Reading a post about investing I realized, I dont get any of this. Its basically gibberish to me no matter how many times I read it over. Im still currently in the saving up for an emergency fund phase but Im 18 and trying to get serious about my finances now. Assistant: Stocks are partial ownership in a company. Whats that partial ownership worth... well, thats a very long story. Is it the intrinsic value of the companys property? The expected future earnings? Thats way too long a conversation. Bonds are debt. Someone elses debt. Youve heard of the national debt assuming in U.S., but other countries have it too? When the government borrows money, they issue bonds, which you can buy. They pay a set amount of interest at regular intervals, and after the lifetime of the debt, return the amount borrowed too. There are other forms of bonds, non-government, government-but-not-federal, etc. The value of these dont fluctuate up or down anywhere near as much as stocks do.When youre ready to invest, the short story is youll have a mix of investments, mostly of these two things. Does this help put into perspective what youve been reading?Human: This does make things a little clearer! So stocks make sense besides how to pick them and factors causing them to rise and fall but Im sure Ill figure that out as I gain more knowledge.Im still a bit unclear on bonds. Now my understanding is that its basically like how some college loans are private and you pay that entity instead of the college. In bonds, I would be that entity because I bought the debt and theyre paying it back to me? And the risk would be that they may not pay it back, as some people dont? Is that correct?  <response>: A good way to pick stocks is not to pick them at all. Index funds are a mechanism that lets you invest in a large number of stocks all at once. This results in diversification because you are not exposed to just a handful of stocks that you picked, but rather the hundreds or thousands of stocks tracked by the index. 