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 payment during that period, called interest 🤑

At the end of the bond's term, the borrower also pays you back the original money you lent 💸

So, ideally you get all of your money back plus a bit extra 🤑

The amount of payment you receive is determined by the bond's interest rate which is the % of the loan you receive as an interest payment each year.

Say you lend your friend $100 at a 12% interest rate 🤝

In return, your friend pays you back the $100 in a year, plus $12 in interest -- so $112 total!

Unlike stocks, you know what investment return you'll get on a bond before you buy it!

Because of this, bonds are also referred to as "fixed income" instruments since your income is predetermined 🤔

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

However, not every loan always gets repaid, so bonds are still not truly risk-free 🥲

There are three main types of bonds people buy: corporate bonds, municipal bonds, and treasury bonds 🏦

These involve lending money to different types of people and entities.

Before you invest in bonds, be sure to understand who you're really lending money to, and what the reward -- the interest -- is! 🏃