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What do you know about bonds? Not James Bond, investment grade bonds. If you guessed "something having to do with the stock market," you're on the right track but not completely there! The question you should be asking is “are bonds a good investment?”
When you invest in stocks, you know that you own a piece of the company’s value. When the demand for that stock increases, the market value goes up. If you sell when the market value is high, you make a profit.
When you invest in bonds from a bond market, they are much like loans with you acting as the bank. You get a certificate showing that a business, city, or government owes you money to repay you for your investment in their spending on growth, equipment, construction, and other projects. When your bonds mature, you can cash them in for more than you paid for them. Some coupon bonds pay off steadily throughout the maturation of a bond (payout times depend on terms) in the form of coupons and the remainder is paid off when the bond reaches maturity.
So what does that mean for you? Are bonds a good investment option for your portfolio? Keep reading to find out!