Bonds
Loans you make to a government or company. They pay fixed interest on a schedule and return your principal at maturity — steadier and duller than stocks.
By Findley's Finance · Last reviewed: September 2026
Why it matters
Bonds are the shock absorbers of a portfolio: when stocks crash, high-quality bonds usually hold or rise, which is why retirees lean on them. The tradeoff is lower long-term returns. Bond prices move opposite interest rates — when rates rise, existing bonds fall — so a bond fund can still lose money in the short run.
Concrete example
A $1,000 bond paying 5% sends you $50 a year, then returns the $1,000 when it matures.