Explaining the world of bonds Bonds can seem complicated at times, but if the idea of a regular income appeals to you, it’s worth finding out more about it. If you don’t know your coupon from your credit rating or your principal from your par value, this guide is designed for you. Our aim is to give you the basics, to help you make informed The name’s bond... decisions about your investment aims. Often referred to as bonds, they’re Depending on your situation and your financial goals, investing in bonds could also known as ‘fixed income’ be right for you. But if, after you’ve read this guide, you think you would be or ‘fixed interest’ securities. better suited to something different, there are a variety of other investment It’s likely you’ll come across all options for you to have a look at. These are explained in more detail in our other Spin-free guides; see page 15 for more details. these terms when you read about investments. They all describe the So, what are bonds? same thing, so we’ll just call them A bond is a loan bonds in this guide. When you buy a bond, you are lending money to the government or company that issued it They will give you regular interest payments in return, plus the original amount back at the end of the loan The value of investments, and the income from them, will fluctuate which will cause the fund price to fall as well as rise and you may not get back the original amount you invested. 3