Bonds: Lending Your Money
01.The Government IOUs
If buying a stock is like becoming a partner in a company, buying a bond is like becoming a lender. When you buy a bond, you are loaning your money to a company or the government. They promise to pay you back on a specific date, plus regular interest payments along the way.
02.Safety and Stability
Bonds are generally much safer than stocks. If a company goes out of business, they must pay back bondholders before stock owners get anything. US Government bonds are considered the safest investments in the world because they are backed by the United States government.
03.The Fixed Income
Because bonds pay a fixed, predictable interest rate, they are great for investors who want stable income without the wild swings of the stock market. They add balance to a wealth-building plan.