Bonds
Safe, steady income for conservative investors and retirees.
Bonds are loans you make to governments or corporations. In return, they pay you interest and return your principal at maturity.
Bond Types
⚠️ Bond Risks
Interest rate risk, credit risk, and inflation risk. However, bonds are generally much safer than stocks and provide steady income.
Risk Level: Low
Bond Investment Cases
🏛️ Case 1: US Treasury Bonds - Safety First
Investment: 0,000 in 10-Year Treasury (2020)
Result: 1.5% yield → capital loss when rates rose to 4%+
Lesson: Long-term bonds lose value when interest rates rise. Consider laddering strategy.
💼 Case 2: Corporate Bonds - Yield vs Risk
Portfolio: Investment-grade corporates (AA+ rated)
Return: ~4-5% yield with lower default risk
Lesson: Balance yield with credit quality. Avoid yield traps in high-yield bonds.
How vs Other Investments
Bonds Compares| Feature | Bonds | Stocks | Savings | ETFs |
|---|---|---|---|---|
| Avg return | ~3-6% | ~10% | ~0.5-5% | ~10% |
| Risk | Low-Medium | Medium-High | Very Low | Medium |
| Volatility | Low | High | None | Medium |
| Income | Yes (coupon) | Div optional | Yes | Div optional |
Historical Performance
Government bonds have returned roughly 3-5% per year, corporate bonds 4-6%. In 2022, as interest rates rose sharply, long-term bond indices fell about -13% — a rare but real loss. Bonds pay periodic coupons and return principal at maturity.
Frequently Asked Questions
Are bonds risk-free?
No. While safer than stocks, bonds carry interest-rate risk (prices fall when rates rise) and credit risk (issuer default).
Bond or savings account?
Savings are near risk-free but pay little. Bonds offer higher yield for taking on some price risk.
What is duration?
Duration measures a bond's sensitivity to interest-rate changes. Higher duration means bigger price swings when rates move.
⚠️ Disclaimer
Figures above are historical/illustrative averages, not forecasts. Investment involves risk, including loss of principal. This page is educational and not financial advice.