Bonds are fixed-income investments that can play an important role in your portfolio. Learn the basics of bonds, including the various types, prices, and yields, and then find out how to add them to your investment plan.

Frequently Asked Questions

  • What are bonds?

    Bonds are debt securities that act as a way to raise money from investors who lend money for a certain period of time. You can buy bonds from the government, a municipality, or a corporation that issues them. The issuer will agree to pay you a specific rate of interest during the life of the bond, plus the principal amount when that time is up and the bond matures.

  • How do you cash in savings bonds?

    You can cash in most paper savings bonds at your local bank or credit union—just be sure to ask your financial institution if it cashes savings bonds first. You may also be able to mail in your bonds to Treasury Retail Securities Services. If you have an electronic savings bond, you can cash it online at TreasuryDirect.gov by logging in and setting up the transfer of money to your bank account. 

  • How do you buy bonds?

    You can buy bonds through a broker or investment advisor, via a mutual fund or ETF, or online through a brokerage firm. You can also buy government and savings bonds through TreasuryDirect.gov, and may be able to buy them through a bank.

  • What are government bonds?

    Bonds issued by the government are used to raise money to help fund the federal government and projects around the U.S. They are known to be safe and popular investments because they are backed by the faith and credit of the U.S. government. The U.S. Department of the Treasury issues the bonds, also known as T-bonds, with maturities as long as 30 years. You can buy them through TreasuryDirect.gov.

  • How long does it take for a bond to mature?

    Bonds mature at different rates depending on the type. Treasury bonds have terms of 20 or 30 years, while corporate bonds may have a maturity as short as two or three years. If you hold the bond until maturity, you will likely get paid the interest and face value of the bond. You may be able to sell before the bond matures, but it could come at a cost.

  • What are junk bonds?

    Junk bonds are a type of corporate bond. They are high-yield, which means they’re riskier than other bonds. Junk bonds are usually issued by companies that have a greater risk of default and so they may not be able to obtain an investment-grade bond credit rating. The main risk of junk bonds is that the issuer of the bond may not be able to pay out the interest or face value of the bond.

  • How do you buy municipal bonds?

    Municipal bonds, also known as “munis,” are issued by states, cities, counties, or other government entities to help fund obligations and projects such as building schools or highways. There are two types of munis: general obligation bonds and revenue bonds. You can buy them through a broker or investment advisor, in a municipal bond mutual fund or ETF, or directly online through a brokerage firm.

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Page Sources

  1. TreasuryDirect. "Treasury Bonds."

  2. U.S. Securities and Exchange Commission. "What are Corporate Bonds?," Page 1.

  3. Vanguard. "Vanguard Intermediate-Term Corporate Bond ETF."

  4. U.S. Securities and Exchange Commission. "Basis Point."