What Is A Bond Investment?
A bond is a security issued by the government or an entity, and it can be a debt transaction involving only public debt. Bonds are considered equity-like, meaning they may be bought and sold by the holder.
Bonds are essentially an IOU. When you purchase bonds, a business or institution, such as the government, effectively borrows money from you with the promise to recoup it, plus interest.
Most bonds have two different kinds of payments. One is the one-time payment paid when your bonds reach “maturity,” and the other is a series of smaller payments, known as “coupons,” that are deducted from the lump sum at predetermined intervals.
The bond investment is a popular investment vehicle in modern times. It has become a household name and has driven the economy to success.
Accordingly, the finance industry is very interested in understanding how these types of investments work, where they are most applicable, and how they can help to build wealth through the right timing.