A bond is a fixed-income security in which an issuer—such as a government, municipality, or corporation—raises capital from investors and, in return, commits to paying interest and repaying the principal at maturity.
Compared to stocks, bonds are often considered less volatile, although the actual risk depends heavily on the issuer’s creditworthiness, the bond’s maturity, and the prevailing interest rate environment.
Within a portfolio, bonds are commonly used for stabilization, income planning, and diversification. Their prices can move inversely to stocks, making them an important component of asset allocation.
In wealth management, bonds are used both directly and through funds or ETFs.
