Explain like I’m 5. What are bonds, how do they work, should I invest in them over etfs or alongside etfs, and are they worth investing in. Thanks in advance.
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The government wants to borrow some money from you while making it worth your while in the long run.
You buy a bond, which is kind of like a check — it has value because we say it has value.
You buy a bond for $25, and the government gets to use your $25, and then in five or ten years or whatever the term is, the government gives you $50.
Bonds are low risk and guaranteed, and they take time.
They may perform better than the market over the same amount of time, or they may perform worse than the market over time.
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