A bond is an investment that pays a fixed rate of return through interest or dividend income. They’re often used to balance equity risk, provide income, and hedge against inflation.
What is a bond?
Bonds are generally stable options for investors. Their fixed rates of return can provide safety for risk-averse investors, and they can usually provide downside protection for an equity-heavy portfolio.
Bonds are the most common type of fixed income, and there are different types: corporate, treasury, high-yield, and municipal. They also have varying durations and risk levels, which can serve different roles in a well-diversified portfolio.