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StockCram is not a broker-dealer, investment adviser, or financial institution. All content is for educational and informational purposes only and should not be construed as personalized investment advice. Consult a qualified financial professional before making investment decisions. Past performance does not guarantee future results.Simple Definition
A loan you give to a company or government. They pay you back with interest.
Why It Matters
Bonds are the 'boring but reliable' part of investing. While stocks might return 10% but crash 30% some years, bonds typically return 3-5% with much smaller swings. That's why a classic portfolio is '60% stocks, 40% bonds' - the bonds cushion the blow when stocks crash. As you get older, bonds become more important for stability.
Key Points
- US Treasury bonds are considered the safest investment in the world
- When interest rates rise, existing bond prices fall (and vice versa)
- Bond ETFs like BND or AGG give you instant diversification across thousands of bonds
Related Terms
Common Questions
A loan you give to a company or government. They pay you back with interest. Bonds are the 'boring but reliable' part of investing. While stocks might return 10% but crash 30% some years, bonds typically return 3-5% with much smaller swings.
Bonds are the 'boring but reliable' part of investing. While stocks might return 10% but crash 30% some years, bonds typically return 3-5% with much smaller swings. That's why a classic portfolio is '60% stocks, 40% bonds' - the bonds cushion the blow when stocks crash. As you get older, bonds become more important for stability.
US Treasury bonds are considered the safest investment in the world
When interest rates rise, existing bond prices fall (and vice versa)
Bond ETFs like BND or AGG give you instant diversification across thousands of bonds