Bond
A loan you make to a government or company that pays regular interest and returns the principal at maturity.
A bond is a fixed-income security: you lend money to an issuer, a government or corporation, for a set period, and in return you receive regular interest payments (the coupon) plus your original amount back when the bond matures. Bonds are generally less volatile than stocks and provide predictable income, which is why they are used to balance riskier holdings in a portfolio. Their prices move inversely to interest rates, so when rates rise the prices of existing bonds fall. Government bonds are considered among the safest investments, while corporate bonds pay more to compensate for higher risk.
Example
You buy a 5-year bond worth $10,000 with a 4% coupon. You receive $400 in interest each year, and at the end of year five you get your $10,000 back.
Try in Assetli
Read more
Related terms
Interest Rate
The percentage charged on borrowed money or earned on deposited/invested money, expressed as an annual rate.
Diversification
The practice of spreading investments across different assets, sectors, and geographies to reduce the impact of any single investment's poor performance.
Inflation
The rate at which the general price level of goods and services rises over time, reducing the purchasing power of money.
Stock (Share)
A share of ownership in a company that entitles the holder to a portion of its profits and assets.
Explore more terms
ETF (Exchange-Traded Fund)
A fund that holds a basket of assets (stocks, bonds, or commodities) and trades on a stock exchange like an individual stock.
Dollar-Cost Averaging (DCA)
An investment strategy of regularly investing a fixed amount regardless of market price, reducing the impact of volatility over time.
Compound Interest
Interest earned on both the initial principal and the accumulated interest from previous periods, creating exponential growth over time.
FIRE (Financial Independence, Retire Early)
A financial movement focused on aggressive saving and investing (often 50–70% of income) to achieve financial independence and the option to retire decades earlier than traditional retirement age.
Net Worth
The total value of all your assets (cash, investments, property) minus all liabilities (loans, mortgages, credit card debt).
Asset Allocation
The strategy of dividing investments among different asset classes — stocks, bonds, real estate, cash — to balance risk and return according to your goals and risk tolerance.