Bond
A bond is a type of investment where you lend money to a government or company for a fixed period.
1 min read Learning to Invest
What it means
A bond is a type of investment where you lend money to a government or company for a fixed period. In return, the issuer usually pays you interest and aims to repay your original investment when the bond matures.
Example
You buy a UK government bond that pays regular interest for five years before returning your original investment at maturity.
Why it matters
Bonds are often used alongside shares to help balance the risk of an investment portfolio.
Bonds can still fall in value, especially if interest rates rise or the issuer's financial position worsens.
Are bonds risk-free?
No. They are generally less volatile than shares but still carry risks.