What is a Bond?

What is a Bond?

A bond is like a loan that you give to a company or the government. In return, they promise to pay you back after a certain amount of time, with a little extra as a thank you for lending them money. It's a way to make some money from your savings, but it's usually safer than buying stocks because you know exactly how much you're going to get back if everything goes according to plan. [1]

3 things to know about bonds

1. Bonds are generally considered a safer investment compared to stocks because the return is fixed and you usually know when you'll get your money back. This can be a good choice if you want to earn money without too much risk.
2. There are different types of bonds, including those offered by the government, cities, and companies. Each type has its own level of risk and return, so you can choose what fits best with your financial goals. [2]
3. If a company or government is in trouble, bondholders are often paid back before stockholders during the repayment process. This makes bonds a bit safer as an investment in case things go wrong.

Sources

[1] https://www.investor.gov/introduction-investing/investing-basics/investment-products/bonds-or-fixed-income-products/bonds

[2] https://www.investor.gov/introduction-investing/investing-basics/investment-products/bonds-or-fixed-income-products/bonds#Types

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