Bonds

Bonds are the least sexiest investment

Then Why Would Anyone Invest in Bonds?

Most everyone knows that over the long-run, nothing beats the stock market. This being the case, why would anyone invest in bonds? Although they pale in comparison to equities in the long run, bonds have several traits that stocks simply can't match. First, capital preservation. Unless a company goes bankrupt, a bondholder can be almost completely certain that they will receive the amount they originally invested. Stocks, which are subordinate to bonds, bear the brunt of unfavorable developments.

Secondly, bonds pay interest at set intervals of time, which can provide valuable income for retired couples, individuals, or those who need the cash flow. For instance, if someone owned $100,000 worth of bonds that paid 8% interest annually (that would be $8,000 yearly), a fraction of that interest would be sent to the bondholder either monthly or quarterly, giving them money to live on or invest elsewhere.

However, all it takes is a bear market to remind investors of the virtues of a bond's safety and stability. In fact, for many investors it makes sense to have at least part of their portfolio invested in bonds.

All you need to know about Bonds

Bond Basics
Why would anyone invest in Bonds?
Debt versus Equity
Why Bother with Bonds
When to Invest in Bonds
Risk versus Reward
Bond Prices are Inverted
Advanced Bond Concepts
Bond Type Speci
Types of Bonds
Bond Pricing
Accounting of different Payment frequencies
Pricing Zero Coupon Bonds
plus 30 more pages