Learn about investing in bonds, options to buy bonds, and understanding bond concepts such as coupons, par value, and bond ratings.

What is a Bond?

A bond is a debt security issued to raise funds and the issuer gives you a promised rate of returns. It is a long-term fixed interest security with a maturity above 1 year. A bond’s pricing is affected by the coupon rate, principal (par) value, years to maturity, and rate of return (discount rate).

us-government-bond

Bonds used to look like this

Bond Issuers

  1. Supranational bonds: issued by internal groups/powers
  2. Government/sovereign bonds: issued by governments
  3. State/non-government/municipal bonds: issued by state-governments
  4. Quasi government bonds: issued by quasi-government agencies
  5. Corporate bonds: issued by companies
  6. Individual/celebrity bonds: issued by individuals

 

What do You receive as a Bondholder?

  1. Interest payments (coupons)
  2. Your principal sum on maturity (par value)

 

Benefits

  • Bonds generally viewed as safer and less volatile investment asset class compared to equities.
  • Investors can more easily understand bonds with access t