What are the pros and cons of bonds?

The pros of bonds include a range of benefits for investors, such as: Lower risk. Bonds backed by issuers that can repay their debts are lower-risk investments than many other assets. For example, U.S. government bonds are backed by the full faith and credit of the U.S. government and typically pay interest and principal payments on schedule.

Are bonds a good investment?

While less exciting perhaps than stocks, bonds are an important piece of any diversified portfolio. Bonds tend to be less volatile and less risky than stocks, and when held to maturity can offer more stable and consistent returns. Interest rates on bonds often tend to be higher than savings rates at banks, on CDs, or in money market accounts.

Are bonds better than stocks?

They're safer and less volatile than stocks, offering predictable, but often lower returns. A bond is a loan from a lender — like you, the investor — to an issuer, like a company or government. In return, the issuer agrees to pay the principal of the loan, plus interest, by the end of a fixed period of time.