Bonds are debt securities issued by corporations, municipalities, or governments to raise capital. When you purchase a bond, you are essentially lending money to the issuer in exchange for periodic interest payments and the return of the bond's face value at maturity. Bonds are considered a more stable investment compared to stocks, offering predictable income and lower risk. There are various types of bonds, including government bonds, municipal bonds, corporate bonds, and high-yield bonds, each with different levels of risk and return. Government and municipal bonds are typically lower risk, while corporate and high-yield bonds offer higher returns but come with greater risk. Bonds play a crucial role in a diversified investment portfolio, providing balance and stability.
