Finance & Fury Podcast

Today’s episode stems from the question last week from William about investment bonds (an investment vehicle, kinda like a life insurance product). Today however, we’re talking about the asset class of Bonds   What are bonds? A bond is a debt instrument - a form of lending. Part of the ‘Fixed Interest’ asset class (ever seen a multi sector asset allocation, like inside a Super Fund) Financial Product designed to raise money for the entity that issues the bond I liken it to an interest only loan – If you need money, you borrow it (like a mortgage) which you pay back along with interest too. When a company or the Government needs money, someone (you) purchase that bond – Essentially loaning money to the issuer who then pays you interest (coupons) At the Bond Maturity – you get the initial loan back (unlike a PI loan)   Basic Terms Face value: This is the nominal value of the bond, typically $100. It also refers to the principal lent to the bond issuer which they commit to repay to investors when the