Ever wondered how governments and some companies raise money? 💸
Often through 🥁bonds 🥁, which are essentially loans paid by investors like you!
When you buy a bond, you are lending money for a certain period of time 🏦
In return, you get a fixed amount of payments during that time period 🤑
At the end of the bond's term, the issuer pays you the original amount of money you lent 💸
So, ideally you get all of your money back plus more 🤑
Here’s an example:
1️⃣ You give your friend $100 🤝
2️⃣ Your friend pays you $2 every month and the full $100 in one year 📅
3️⃣ So, you’d get $100 plus $24 = $124 total! 🏦
But, it’s important to note that not every loan is fully repaid 🥲
There are three different types of bonds: corporate bonds, municipal bonds, and treasury bonds 🏦
Corporate bonds = loans to companies for various products and operations 🚀
Municipal bonds = loans to local governments for projects such as building schools or roads 🚧
Treasury bonds = loans to the federal government to fund their operations and debt obligations 🏛️
Bonds are typically low risk, but also low reward, even over a long period of time 🤔
You also need lots of money up front
Before you invest in bonds, be like a spy and do some field research before diving into an operation, or investment 🏃
Now you know all about bonds, just like James Bond. . . 🕵️
