Bonds are a form of debt instrument that enables investors to lend money to entities, such as governments or corporations. They come with several key features that make them popular investment options. Firstly, bonds offer fixed interest payments, often referred to as coupons. This means investors receive regular income at predetermined intervals until the bond matures. Secondly, bonds provide a relatively stable investment compared to stocks. The principal amount invested is typically returned at maturity, assuming no default occurs. Thirdly, bonds can vary in terms of credit quality. Higher-rated bonds from reputable issuers carry lower risk but offer lower yields, while lower-rated bonds might offer higher returns but come with greater risks. Additionally, bonds can be traded on secondary markets, allowing investors flexibility. Lastly, inflation can impact bonds' real returns; if inflation rises, the purchasing power of future payments may decrease. Overall, bonds serve as a critical component of diversified portfolios due to their predictable nature and steady income stream. 💸💰