Bonds

The secret backbone of the financial world 💰

Ever wondered how governments and some companies raise money? 💸

Often through 🥁bonds 🥁, which are essentially loans paid by investors like you!

When you buy a bond, you are lending money for a certain period of time 🏦

In return, you get a fixed amount of payments during that time period 🤑

At the end of the bond's term, the issuer pays you the original amount of money you lent 💸

So, ideally you get all of your money back plus more 🤑

Here’s an example:

1️⃣ You give your friend $100 🤝

2️⃣ Your friend pays you $2 every month and the full $100 in one year 📅

3️⃣ So, you’d get $100 plus $24 = $124 total! 🏦

But, it’s important to note that not every loan is fully repaid 🥲

There are three different types of bonds: corporate bonds, municipal bonds, and treasury bonds 🏦

Corporate bonds = loans to companies for various products and operations 🚀

Municipal bonds = loans to local governments for projects such as building schools or roads 🚧

Treasury bonds = loans to the federal government to fund their operations and debt obligations 🏛️

Bonds are typically low risk, but also low reward, even over a long period of time 🤔

You also need lots of money up front

Before you invest in bonds, be like a spy and do some field research before diving into an operation, or investment 🏃

Now you know all about bonds, just like James Bond. . . 🕵️

Test your knowledge

What is a bond?

Choose an option

What are the three different types of bonds?

Choose an option

Why is it important to do research before investing in bonds?

Choose an option

What's next?

Featured Lessons