What Are Bonds?
Bonds are loans that investors make. The borrowers get the cash they need while the lenders earn interest. Bonds are issued by large corporations and governments to raise funds for their projects. Bonds appeal to many investors because they promise to pay a set amount of interest on a regular basis. That's why they are called Fixed-Income securities.
Another good thing about Bonds is that the issuer promises to repay the loan in full and on time. So bonds seem less risky than investments that depend on the ups and downs of a stock market. If you are saving and don't need to earn money right away, this investment instrument will give you a good return without too much risk. Your money can earn interest higher than the rates paid by banks.
A bond has also a fixed maturity date when the load expires and must be paid back in full, at par value, or the amount it cost when it was issued. The interest a bond pays is also set when the bond is issued. Government bonds usually come in the form of treasury bills and treasury bonds(5, 10 or 30 years term). The longer the term, the higher the interest rate. Government bonds are safer than bonds issued by large corporations because only the government can print money to pay off government securities and large corporations don't have any guarantees that they can pay off their loans in case they go out of business.
Another good thing about Bonds is that the issuer promises to repay the loan in full and on time. So bonds seem less risky than investments that depend on the ups and downs of a stock market. If you are saving and don't need to earn money right away, this investment instrument will give you a good return without too much risk. Your money can earn interest higher than the rates paid by banks.
A bond has also a fixed maturity date when the load expires and must be paid back in full, at par value, or the amount it cost when it was issued. The interest a bond pays is also set when the bond is issued. Government bonds usually come in the form of treasury bills and treasury bonds(5, 10 or 30 years term). The longer the term, the higher the interest rate. Government bonds are safer than bonds issued by large corporations because only the government can print money to pay off government securities and large corporations don't have any guarantees that they can pay off their loans in case they go out of business.
