Bonds are issued by local and national governments, financial institutions and large companies to raise money. They are bought by private or institutional investors, who usually receive fixed interest payments twice a year in return for providing capital to the issuer of the bonds. Investors have to make a long-term investment, but once the bonds reach maturity, they get their money back. Some government bonds, for example, British Gilts and German Bunds, are considered to be virtually risk-free.
If you’d like a little more information about bonds and why investors choose them, you can watch this short video explanation.
