Bonds are fixed-income securities where investors lend money to governments, corporations, or other entities for a specified period at a fixed interest rate. In return, bondholders receive regular interest payments and the principal amount upon maturity.
Bonds are considered a safer investment compared to equities, offering predictable income with lower risk. They play a vital role in diversified portfolios, providing stability and steady returns, especially during market volatility.
Types of Bonds
- Government Bonds: Issued by central or state governments, considered low-risk investments.
- Corporate Bonds: Issued by companies to raise capital, offering higher yields with moderate risk.
- Municipal Bonds: Issued by local authorities to fund public projects, often tax-exempt.
- Fixed-Rate Bonds: Provide interest payments at a predetermined fixed rate.
- Floating Rate Bonds: Interest rates vary based on market conditions or benchmark rates.
Key Features:
- Stable Returns: Predictable income through regular interest payments.
- Lower Risk: Less volatile than stocks, ideal for conservative investors.
- Diversification: Adds balance to investment portfolios with steady income streams.
- Liquidity: Tradable in secondary markets, allowing easy buying and selling.
- Capital Protection: Principal amount returned at maturity, reducing capital risk.
Bonds are an excellent choice for investors seeking consistent income and capital preservation. Diversify your portfolio and achieve financial stability by investing in bonds today.