Bonds

Perhaps the easiest way to think of bonds is as a loan. They’re issued by companies and governments as a way of raising money. Bonds provide a regular stream of income (which is normally a fixed amount paid at regular intervals) over a specific period of time, and promise to return investors their capital on a set date in the future. Bonds can offer stable returns, and are perceived to be lower risk than equities – although typically deliver lower returns over the long-term. Investing in fixed interest securities issued by companies other than those issued or guaranteed by certain governments, exposes you to greater risk of default in the repayment of the capital provided to the company or interest payments due to the fund.