Bond
A bond is a loan you make to a government or company in exchange for regular interest payments and the return of your principal at a set maturity date. Bonds are generally less volatile than stocks, which is why they anchor the 'safer' side of a diversified portfolio.
Bond prices move opposite to interest rates: when rates rise, existing bonds paying less become worth less. Treasurys are backed by the U.S. government; corporate and municipal bonds pay more to compensate for added risk. A common rule shifts more toward bonds as retirement nears.
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