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

Geometric Mean Return

A way of calculating compound returns on an investment or savings over a set period of time.
Read more

Capital

Learn what financial capital means
Read more

Zero coupon bonds

What is a zero coupon bond?
Read more

Lock-up period

The period after an IPO when insiders have to sit on their hands and can’t sell their shares.
Read more

United States Dollar (USD)

The famous greenback our friends in the US use as currency.
Read more

Margin call

Learn what a margin call stands for in financial terms.
Read more

Global Investment Performance Standards (GIPS)

A set of standards which investors use to present their investment results.
Read more

Bond

Learn what a bond is
Read more

Exchange-Traded Fund (ETF)

A collection of investments, pooled into a single fund that can be bought and sold on a stock exchange.
Read more

You're just minutes away from commission-free investing

CAPITAL AT RISK. OTHER CHARGES MAY APPLY.