Bonds are a core element for anyone who is wanting to invest their money and grow their wealth. Just like the well known I.O.U., a bond is a debt security. When ever you buy a bond, you are really lending money to a corporation, a government, a federal agency or another entity and they are all known as issuers.
Once paid for, you are then issued a bond and in return for that money, that issuer promises to pay a certain rate of interest within the life of the bond. When your bond comes due, or matures is another term for this, you are repaid the face value of the bond. Other types of bonds are:Foreign government bonds, mortgage and asset-backed securities and U.S. government securities.
Some people call bonds by another names, notes, debt securities, bills or debt obligations. It is a wise choice to have your portfolio consisting of bonds, stocks and cash, all in varying percentages, as this is recommended by many personal financial advisors. This of course, depends on your personal and individual objectives and circumstances. Investment advisors can help explain options for investments so you will understand all the risks.