An explanation with an example would be greatly appreciated. Thank you 🙂
In: 6
a bond is basically you giving a loan to the government. you give them X amount of money to play with and over time they give you Y back. think banks giving car loans but now you are the bank.
So for instance a 50 dollar bond. You will give the government 25 dollars, they give you the bond saying basically hey buddy I owe you. They take a very long time to mature, can be up to 30 years. Once mature they are now worth the face value of 50 dollars. So, you have now doubled your money. You paid 25 and got 50 back yay. Also, some if you wait long enough can get a little bit more interest but not much, say 60 bucks if you wait another 5 to 10 years to cash it in. After that you get no more.
So, they are micro loans to the government. They are a relatively safe investment but an exceedingly slow one. They really are only good for young people. An old person won’t live long enough for the bonds to mature.
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