A bond is a loan you make to a government, municipality, or corporation in exchange for periodic interest payments (the coupon) and return of principal at maturity. US Treasury bonds (T-Bonds) are considered virtually risk-free. Corporate bonds offer higher yields with more credit risk. Bond prices move inversely to interest rates — when rates rise, existing bond prices fall, and vice versa. Bonds traditionally balance equity risk in a portfolio: when stocks crash, high-quality bonds often rally. Modern portfolios typically allocate 20-40% to bonds depending on age and risk tolerance. Higher-yielding 'junk bonds' carry meaningful default risk.
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Bond
August 22, 2026 · Aditya Gupta
Investing
Related terms
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A 401(k) is an employer-sponsored retirement plan where employees contribute pre-tax salary that grows tax-deferred until withdrawal. The…
Active Management
Active management is the attempt to outperform a benchmark through stock selection, sector rotation, market timing, or any…
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