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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 make to a company or government that pays you interest over time, then returns your original money.
Why It Matters
Bonds are the calm counterpart to stocks. When stocks crash, bonds often hold steady or even rise. A typical portfolio might be 60% stocks and 40% bonds - the stocks for growth, the bonds for stability. Government bonds (like US Treasuries) are considered the safest investments in the world because they're backed by the government's ability to print money and collect taxes.
Key Points
- Generally safer than stocks but with lower long-term returns
- Bond prices move opposite to interest rates - when rates rise, bond values fall
- US Treasury bonds are considered "risk-free" for benchmark purposes
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Stocks vs Bonds
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Common Questions
A loan you make to a company or government that pays you interest over time, then returns your original money. Bonds are the calm counterpart to stocks. When stocks crash, bonds often hold steady or even rise.
Bonds are the calm counterpart to stocks. When stocks crash, bonds often hold steady or even rise. A typical portfolio might be 60% stocks and 40% bonds - the stocks for growth, the bonds for stability. Government bonds (like US Treasuries) are considered the safest investments in the world because they're backed by the government's ability to print money and collect taxes.
Generally safer than stocks but with lower long-term returns
Bond prices move opposite to interest rates - when rates rise, bond values fall
US Treasury bonds are considered "risk-free" for benchmark purposes