Details about

Bonds

Bonds are financial instruments in which an investor lends money to a firm or government for a specified length of time in exchange for periodical interest payments. The issuer returns the investor's money when the bond matures. Bonds are typically referred to as having fixed income because your investment earns fixed payments over the life of the bond.

Bonds are issued by corporations to fund existing operations, new initiatives, or acquisitions. Governments sell bonds to raise funds and supplement earnings from taxes. When you purchase a bond, you become a debtor of the entity that issued the bond.

Many varieties of bonds, particularly investment-grade bonds, are less risky than equities, making them an important component of a well-diversified investment portfolio. Bonds can assist to mitigate the risk of more volatile assets like equities, and they can provide a consistent stream of income while protecting wealth during your retirement years.