Bond
A loan you give to a government or company in exchange for regular interest payments.
What Bond means
A bond is a debt investment: you lend money to a government or company, and they pay you interest for a set period, then return your principal at maturity. Bonds are generally considered lower-risk than stocks but historically have offered lower long-term returns. Bonds add balance to a portfolio, which is why many investors hold a mix of stocks and bonds based on their goals and tolerance for risk.
Example
Buying a 10-year government bond with a 4% coupon means you receive 4% of the face value in interest every year until the bond matures and the initial amount is returned.
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Disclaimer
Definitions are simplified for educational use and are not personalized financial, investment, tax or legal advice.