Finance Flash Go! Episode #3: Bonds

This episode of the Finance Flash Go podcast is all about bonds including what they are and how many you need.

Listen to the full episode and subscribe here!

What is a bond?

A bond is basically an IOU from the government, a corporation, or other entity. You give them money and they promise you to give that amount of money back with a fixed interest rate at a later date (called the maturity of the bond, like 5 years, 7 years, or whatever).

A stock is a part ownership in a company. You buy one share and you become an owner. Each share has a price tag when you buy it that changes based on various and, at times, arbitrary factors as they are traded in the stock market. If the price goes up, good for you, you just made money. If it goes down…not so lucky.

Bonds are considered safer investments in general. You will likely want to have both stocks and bonds in your portfolio. The more bonds you own, the more conservative and less risky the portfolio is. However, the expected returns are lower in return. A good rule of thumb is to take your age and round down to the nearest 10. This is the percentage of bonds that you will want to have.

I really hope that you all enjoy the Finance Flash Go podcast! We plan to release a new episode every weekday answering important finance questions. If you ever want to submit a question to our podcast, send an e-mail to [email protected].

Also, please subscribe and give us a 5-star rating if you enjoy the podcast! It helps us continue our mission of helping all of us to achieve financial well-being!