Investing in bonds comes with a few risks

Investors can buy three main types of bonds: government, corporate, and municipal

Each type has variations of its bond offerings with different interest rates, loan lengths, maturity dates, and terms. Each type also carries its own risks and rewards.

There are three main ways to start investing in the bond market

Invest in the boind market through a brokerage, mutual fund or ETF, or the US government. Each has different steps and terms to follow, from starting rates to opening specific accounts. Some bonds are relatively easy to purchase, but the process differs depending on the type of bond you want.

Bond yields are the returns investors earn from a bond's interest—and they're a key economic barometer.

If the US government paid off its debt, it could disrupt the entire bond market, as Treasury bonds are among the most common bonds for investors and the majority of the national debt is in bonds.

Companies sometimes issue corporate bonds to raise capital

These bonds offer investors regular interest payments in addition to the return of the principal amount at maturity. They allow companies to raise capital without losing ownership.

A bond ETF lets someone invest in multiple bonds through one single fund

There are risks, there are also major perks to buying a bond ETF, like the ability to purchase bonds on the stock market.

The difference between stocks and bonds

While more people invest in stocks than bonds, experts say owning both can make for a healthier portfolio. Stocks are considered a riskier investment than bonds, but tend to have higher returns. While bonds might be the safer option, they won’t grow your wealth as quickly.

The bond market is where bonds and other debt securities are traded

Bonds are fixed-income investments allowing individuals to lend a specific amount of money to a large entity, like a government or corporation, for a set amount of time in return for interest paid out over the life of the loan. The bond market is widely considered a key economic barometer.

Are I-Bonds a good investment?

I-Bonds are savings bonds issued by the US government that can help protect savings from inflation. While that sounds positive, I-Bonds have a few disadvantages, too—for instance, these bonds have to be held for at least a year before you can cash out.

Investors collectively owned $28T in US Treasury securities as of 2025.

Series I bonds are a form of government savings bonds created to shield your investments from inflation

Specifically, I bonds earn interest from both a fixed rate and an inflation rate. This article explains who might benefit from investing in I Bonds—for instance, people seeking to invest savings they do not need to access in the near future.

Treasury bonds, notes, and bills are critical vehicles for the federal government to raise money for public expenses and manage the national debt.

Investors trading their municipal bonds can't use the same method to purchase them

Instead, they’ll have to go through the secondary market, which has its own set of rules and steps to follow. An illustrated, explanatory video can help you learn how to sell your municipal bonds for the best market value.

When compared to stocks and bonds, alternative investments are often less regulated

Alternative investments are also often less liquid than traditional investments; they carry unique risk, return, and tax considerations.

Borrowers were increasingly defaulting on private credit loans as of early 2026

Risks in private credit investing include the industry's lack of transparency and the ability of businesses to borrow more than a bank might allow against their debt. Some borrowers in early 2026, for instance, likely did not expect interest rates to be so high for so long, which could be contributing to an uptick in defaults.

Zero-coupon bonds have no regular interest dates over the length of the loan

Instead, they pay all the interest at once when the bond hits its maturity date. These bonds aren’t the right investment for everyone, but they do carry some pros, like a lower initial investment cost.

Read about the pros and cons of mutual funds.

People often invest in alternative investments to diversify their portfolios

Because alternatives often have little correlation with traditional investments like stocks and bonds, adding them to a traditional portfolio can reduce its overall risk exposure.

BNPL's biggest risks include the ability to stack multiple loans simultaneously

Buy now, pay later loans come with some risks, such as the hefty late fees that can add up over time in the case of missed payments. However, personal finance experts say that tactics like reading the fine print can help consumers use these financial tools more safely.

The bond market dates back to the 1100s in Venice

In the early 1800s, bonds were used to fund US railroads and canals in Great Britain. “Liberty Bonds” were sold during both World Wars in the 20th century. Learning about the early and modern history of bonds can offer a glimpse into how the modern bond market came to be.

Local governments borrow money for long-term projects by issuing municipal bonds

When a city needs to build a school, a road, or a water treatment plant, it usually issues a municipal bond—borrowing money from investors to be paid back over time. The market for these bonds now exceeds $4T.

The Federal Reserve's decisions can impact your money

Car loans, mortgages, business investments—these and more can be drastically impacted by the adjustment of the Federal Reserve’s federal funds rate. Alternatively, savers can earn higher, low-risk yields on their savings when the Fed’s target rate is higher.

For everyday Americans, a relatively high national debt can lead to higher interest rates on financial products such as mortgages.

How the World Bank's pandemic bonds were triggered during COVID-19

In 2017, the World Bank raised a chunk of emergency funds through bonds to help developing countries cover funds in the event of a pandemic. Had no pandemic occurred, investors would have received returns of 6% to 11%. But the global pandemic meant they lost all their money.

Investing in mutual funds can give you access to a wide range of securities, such as stocks and bonds, with just a single investment.

Mutual funds are categorized as stock, bond, money market, and target-date funds.

The US Government sells two types of savings bonds: EE bonds and I bonds

EE bonds have fixed interest rates that the buyer is informed of when they purchase the bond. I bonds, however, earn a rate that can change every six months. A comparative chart details the most significant differences between EE bonds and I bonds.

Chapter 7 and Chapter 11 filings can impact common stockholders

Publicly traded companies don’t file for bankruptcy out of nowhere—there are typically warning signs in a stock’s performance, quarterly earnings calls, and US Securities and Exchange Commission filings.

Mutual fund investors typically must pay a variety of different types of taxes associated with their investment, unless the funds are within tax-advantaged accounts like a 401(k) or IRA.

Shorting is a high-risk and expensive investment strategy that hedge funds specialize in

Most investors buy stocks with the expectation that those stocks will be worth more tomorrow than they are today. Short selling, known as “shorting,” a stock is the opposite: The investor is betting the stock will drop in value.

Mutual funds come with a few associated fees.

How interest rates affect homebuying

Rising interest rates impact every aspect of buying a home. This five-minute article gives a high-level overview of the relationship between the housing market and interest rates.

Why countries have credit ratings

Sovereign credit ratings work like national credit scores, measuring a country’s ability and willingness to repay its debt. Moody’s, S&P, and Fitch are the major agencies assigning these ratings, which influence borrowing costs and investor confidence.

The term 'securities' refers to different types of investments, such as stocks or bonds.

Since the 1990s, banks have sold some of the credit risk of their accounts to external investors, known as SRTs, or synthetic risk transfers

This means if the account defaults, the outside investors assume most of the risk in return for some regular payments, freeing up the bank's ledger. It is a form of insurance used by banks to allow them to free up capital. In 2024, nearly $100B worth of SRT notes were sold.

To continue selling mortgages, agencies that determine how risky a loan is gave high ratings to homebuyers regardless of their actual risk portfolio.

Despite functioning as guarantors for people who can't make bail, courts rarely require bond companies to cover the full forfeiture of unmet release conditions.

Some argue that the rising US national debt has become more important in recent months.

Explore a guide to investing in alternatives

Investors often use alternative investments, from collectibles to real estate, as a way to diversify their portfolios in case of market volatility. Getting started investing in these alternatives differs depending on the investment.

Banks make money by loaning customer deposits and earning interest

This means the interest you earn on your deposits is lower than what the bank earns on the same amount. Banks often keep cash reserves (though a minimum requirement was rescinded in 2020) but generally invest in government bonds, corporate securities, and loans to other banks. During bank runs, depositors withdraw more than the bank has on hand.

Explore a step-by-step guide for getting started as a retail investor

Instead of purchasing individual stocks and bonds, new investors may want to start in funds that track an index—like the S&P 500—or that hold a group of themed stocks.

Retail investors cannot directly invest in private credit funds—but other financial vehicles can offer exposure to the industry

For example, as some US regulations have loosened in recent years, retail investors have begun to get exposure to the private credit market via ETFs that invest in publicly traded financial vehicles with private credit exposure, such as BDCs.

'Floating rate' loans periodically adjust their interest rates in accordance with economic conditions

When the Federal Reserve began raising interest rates in 2022 to combat inflation, interest payments borrowers owed to private credit lenders increased accordingly. Private credit funds benefited as loan returns increased, making the asset class attractive to investors at the time.

It's difficult for individual investors to purchase IPO shares

Although the process of going public means the general public can invest in a company, the initial investment period is different. Before individual investors get in on the action, investment bankers sell the shares to larger financial institutions who can afford the asking price and risk associated with an IPO.

Learn how fine jewelry investing works with this beginner's guide.

While annuities can guarantee an income for risk-averse investors, they may play it too safe for others

Whether or not an annuity is the right investment option depends on the buyer’s unique needs. People who plan to retire soon are more likely to opt for the lower-risk investment, but there may be opportunity costs for people seeking higher returns.

Investors need a 'margin account' to short sell stock

Margin accounts are leveraged accounts through brokerage firms that allow investors to make trades without the full amount of capital on hand. Similar to a secured loan, margin accounts often require some form of collateral and typically have a cap on how much investors can borrow. However, trading with a margin account is much riskier than a traditional investment account. Fees and charged interest are due on margin accounts, regardless of trade performance, meaning it's possible for investors to lose more money than just their initial investment.

What are Treasury yields?

Treasury yields are the interest rates that the US government pays to borrow money for different lengths of time. Specifically, Treasury yields are interest rates on US government debt. They reflect economic outlooks and inflation expectations. Learn more about Treasury yields here.

Not all alternative investments are easy to invest in

For instance, some alternative investments are only available to accredited investors or high-net-worth individuals. Others have relatively high fees compared to traditional investments.

An inverted yield curve has preceded every recession that’s occurred in the last 50 years

Prolonged yield curve inversions can predict recessions, but even brief inversions can cause investors to react with knee-jerk reactions.