Bonds aren't (quite) forever
Though not quite as sexy as the super spy, James’ older corporate brother is a favorite for those a little less keen on risk. Corporate bonds are a great way to diversify your investment portfolio, thanks to their (normally) negative correlation with stocks – but bonds can be confusing. We’ll cut through the jargon in this pack – you’ll have a license to kill in no time.
What are bonds? Bonds are a form of debt: money owed to someone. They are issued by governments (check out our Pack on Government Bonds for more on that) or companies, and when you buy one, you are essentially loaning money to that institution.
How do they work? A bond has a maturity date and a “coupon": you might buy a 10-year bond with a 5% coupon for $100. That means that you’re giving the company $100 for
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