Government Bond
A government bond is a bond issued by a government to borrow money from investors.
1 min read Learning to Invest
What it means
A government bond is a bond issued by a government to borrow money from investors. In the UK these are known as gilts. They're generally considered lower risk than many company bonds because they're backed by the UK government.
Example
The UK government issues gilts to help fund public spending. Investors receive interest and repayment at maturity, provided the government meets its obligations.
Why it matters
Government bonds can help reduce the overall risk of a diversified investment portfolio.
Even government bonds can fall in value before they mature if market interest rates change.
Are government bonds completely safe?
They're generally considered low risk, but their market value can still rise and fall.