Bonds are a core element of any financial plan to invest and grow wealth. If you are just beginning to consider investing in bonds, use this section as a resource to educate yourself on all the bond basics. In this section you will learn:
- what a bond is
- why financial professionals recommend that you have bonds in your
- diversified investment portfolio
- key factors to consider when evaluating a potential bond investment
- fundamental strategies for investing in bonds
- about tools and aids that will help you understand bonds
A bond is a debt security, similar to an I.O.U. When you purchase a bond, you lend money to the issuer of the bond. That issuer could be a corporation, state, city or federal government, a federal agency or other entity.
In return, the issuer agrees to pay you a specified rate of interest over the life of the bond and to repay the face value of the bond (the principal) when it reaches maturity - that is, the date the bond comes due.
There is a wide range of bonds available to investors, such as U.S. Treasury securities, municipal bonds, corporate bonds, mortgage - and asset-backed securities, federal agency securities and sovereign bonds.
Market practices described here apply to the U.S. bond market, and may differ from those in other countries.
You may also see bonds referred to as "bills," "notes," "debt securities," or "debt obligations." These terms all refer to a financial instrument that represents debt owed by an issuer.
Throughout this article, we will simply refer to all of these as "bonds."
Bonds are a core element of any financial plan to invest and grow wealth. If you are just beginning to consider investing in bonds, use this section as a resource to educate yourself on all the bond basics. In this section you will learn:
- what a bond is
- why financial professionals recommend that you have bonds in your
- diversified investment portfolio
- key factors to consider when evaluating a potential bond investment
- fundamental strategies for investing in bonds
- about tools and aids that will help you understand bonds