bond fund
A pool of money collected from many investors that a fund company uses to buy a large number of different bonds at once. You own a small slice of that whole pool instead of one single bond.
Where it is explained in full
Bonds and Treasuries: lending money, with a price that moves. A bond is a loan you make. The interest is fixed, the price is not, and the relationship between the two confuses nearly everyone the first time.
Spreading it out and betting big: what each one protects you from. Owning many things removes one kind of risk and leaves another one completely untouched. Knowing which is which keeps the word from turning into a slogan.
A definition says what a thing is; it never says whether it fits you. The guides explain how it works and name the professional who confirms it for a particular person. The No Advice Disclosure.
Words beside it
- Bond ladder
Bonds maturing in successive years so some money comes due regularly.
- bondholder
A bondholder is the person or group that owns a bond, meaning they are the ones who lent money to a company or government. They receive interest payments and get their money back at the end of the loan period.
- corporate bond
A loan you give directly to a company instead of a government, and the company promises to pay you back with interest over a set period of time.
- Emergency fund
Cash set aside for the unexpected, usually three to six months of expenses.
- fund
A pool where many investors put money together so a manager can buy a large collection of investments on everyone's behalf. You own a small slice of the whole pool rather than any single investment directly.
- I bond
A savings bond whose rate adjusts with inflation, bought from the Treasury.
- Index fund
A fund that holds the components of a published index in the same proportions, changing only when the index does.
- Junk bond
A bond rated below investment grade. Higher interest for higher risk of not being paid.
Ask about bond fund
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