Investment Guide
Explore different investment options to help you build wealth and achieve your financial goals.
Bond Investing
Bonds are debt securities that represent loans made by investors to borrowers. When you buy a bond, you're essentially lending money to the issuer—which can be a government, municipality, or corporation—for a defined period of time at a fixed interest rate.
Bonds are generally considered less risky than stocks and are an important component of a diversified investment portfolio. They provide a predictable income stream and help preserve capital.
Types of Bonds
Treasury Bonds
Issued by the federal government. They are considered the safest bonds since they're backed by the "full faith and credit" of the U.S. government.
Municipal Bonds
Issued by states, cities, and counties. Interest is often exempt from federal taxes and sometimes from state and local taxes as well.
Corporate Bonds
Issued by companies to fund operations or expansions. They generally offer higher yields than government bonds but come with higher risk.
I Bonds & TIPS
Government bonds that are indexed to inflation, helping protect your investment from the eroding effects of rising prices.
Key Bond Concepts
- Face Value (Par Value)The amount the bond issuer will pay back at maturity.
- Coupon RateThe interest rate the bond issuer will pay on the face value, typically semi-annually.
- YieldThe total return anticipated on a bond if held until maturity, expressed as an annual percentage.
- Maturity DateThe date when the bond issuer returns the principal to investors.
- Bond RatingA grade given to bonds that indicates their credit quality. Private independent rating services provide these evaluations.
Current Bond Rates
| Bond Type | Yield | Maturity | Rating |
|---|---|---|---|
| U.S. Treasury 10-Year | 4.2% | 10 years | AAA |
| U.S. Treasury 5-Year | 3.9% | 5 years | AAA |
| U.S. Treasury 2-Year | 3.7% | 2 years | AAA |
| Corporate Bond AAA | 4.8% | Various | AAA |
| Corporate Bond BBB | 5.5% | Various | BBB |
Bond data is updated hourly. Last updated: 8:00:15 AM
The Role of Bonds in Your Portfolio
Bonds can serve multiple purposes in an investment portfolio, including:
- •Providing steady income through interest payments
- •Preserving capital with relatively lower risk than stocks
- •Diversifying your investments to reduce overall portfolio volatility
- •Creating a balanced approach to meet short and long-term financial goals