6 things you need to know about bonds


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One reason people flock to bonds is the investment’s legendary stability.

When domestic and global events — such as a crazy election or Brexit — send stocks tumbling, bonds remain relatively stable.

If you wonder about hopping on the bond-wagon, here’s what you need to know.

Bonds are often used to finance public things you care about. When a city or a government wants to finance construction — a stadium, hospital or highway system — it takes on debt in order to do so. Instead of investing in ownership, the way you do when you buy into stocks, bonds are a way of investing in debt. The investor — that’s you — is the lender. In return, you get regular interest payments and your original investment back.

Corporate bonds let you invest in a company looking to finance operations or expansion.

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