A bond is a loan to a government, agency, or company that is repaid with interest. Bonds can complement stocks and other more aggressive investments in a portfolio. The IOUs of the financial world, bonds represent a government's, agency's, or company's promise to repay what it borrows—...
Face value:Also known as par value, the face value is what the bond is initially worth. Price:The price of a bond is what you pay to own the bond. It may be the face value, but it may also be more—a premium—or less—a discount—than the face value if you’re buying it on ...
A savings bond is a low-risk, long-term investment that pays interest for up to 30 years. Unlike many financial instruments, it can be bought as a gift.
Here’s everything you need to know about what a mutual fund is, how it works, and why they could be your most valuable tool for long-term investing.
Speaking of active management, you’ll pay an expense ratio fee to invest in a fund. That said, money in a mutual fund is usually tax-exempt, creating a tax-advantaged situation that can offset the fund’s fees. However, when fund managers exit positions to profit, those returns get dis...
So, What Is a Bond, Exactly? Bonds are securities representing debt obligations, usually issued by either corporations or governments. They’re normally issued in denominations of $1,000 and pay interest twice each year. What’s more, the interest rate is fixed for the duration of the bond....
What is a coupon bond? Bond: Bonds refer to an investment instrument where a corporation or government borrows money from investors for a specific period from private investors in exchange for a fixed interest rate. After the bond matures, the corporation or government gives back the money to ...
What is a Treasury bond? Treasury bonds, often referred to as T-bonds, are long-term loans made to the U.S. government. When you buy a Treasury bond, you’re essentially lending money to the federal government. In return, the government agrees to pay you a fixed rate of interest every...
What is Yield? Yield is used to describe the annual return on your investments as a percentage of your original investment, usually from either: Dividend payments from a stock, ETF, or mutual fund Interest payments from a bond For Stocks, ETFs, and Mutual Funds: ...
A bond fund is a mutual fund or an exchange-traded fund (ETF) that buys and sells debt instruments like government and corporate bonds. The primary goal of a bond fund is to generate monthly income for investors. For an investor, a bond fund is an alternative to buying individual bonds. ...