Bond
A loan you give to a government or company. It usually pays interest and returns the money at the end.
Example: a €1,000 bond that pays 3% a year gives you €30 each year until it ends, and then the €1,000 back, if the borrower can pay. Bond prices fall when interest rates rise. If the borrower fails, you can lose part or all of the money.
Related terms
Explained in these lessons
- What moves the price of gold
- Investing, trading and gambling: what is the difference?
- Index funds and ETFs: what you actually own
- Diversification: not everything in one basket
- Ups and downs: what long-term investors must sit through
- Investor behaviour: buying high, selling low, and how to stop
- What crypto is, without the hype