What is a bond?

Learn what a bond is

When governments and companies want to raise money, they’ll often do so by issuing bonds.

Bonds are effectively promissory notes. In return for buying bonds, investors will receive the money they put in back, plus interest.
Investors usually buy bonds because they promise a fixed return, in the form of interest, that is supposed to be paid back at one or several preset dates.

As the interest rate paid on bonds is usually fixed and pre-set, it’s common for bonds to be referred to as ‘fixed-income’ investments. Today, not all bonds have a fixed interest rate. Many are now issued with variable or floating interest rates, which change over time.

Deep dive: What are bonds and why investors buy them?

More terms

Rate of Return

Profit on an investment, expressed as a percentage of the investment.
Read more

Real Estate Investment Trust (REIT)

An investment trust specialised in investing in commercial property such as parking garages or GP offices.
Read more

52-week high/low

The highest, or lowest, price a share has traded at in a passing year.
Read more

Profit and Loss Statement (P&L)

A statement that summarises firm's expenses, costs, and revenues incurred during a time period. AKA income statement.
Read more

Professional Client

An investor that is able to meet several regulatory criteria.
Read more

Total Return

This is the measurement of a fund’s performance in a specific period.
Read more

Withholding Tax

A tax deduction made at the source of the payment.
Read more

Oligopoly

A situation in which a market or industry is controlled by a small group of companies.
Read more

Over-The-Counter (OTC)

A security that is sold outside of an exchange.
Read more

You’re just minutes away from commission-free investing

When you invest, your capital is at risk