Basics of Bond Investments

Marvin Appel

If you are planning for retirement, you want to be able to sleep well at night without having to worry about whether your investments will pay you enough to live on. A thoughtful program of investing in bonds can help you achieve this peace of mind. Here I explain what bonds are, how they work, and why they are usually (but not always) safe.

What Is a Bond?

A bond is a loan that an investor makes to a business or government. Bond investors make loans and, in return, receive regular interest payments. You might be familiar with loans from your own borrowing. For example, if you have a mortgage, you make an interest payment each month and, in addition, pay down a bit of the principal so that by the time the ...