Now let's explore bonds - a completely different type of investment from the stocks we learned about last time.
When you buy a bond, you're not buying ownership in a company. Instead, you're making a loan to a government or corporation.
Engagement Message
What do you expect someone to do in return when you lend them money?
Here's how bonds work: You lend $1,000 to a company for 10 years. In exchange, they promise to pay you interest every year (like $50) plus your original $1,000 back at the end.
Think of it like being a bank - you loan money and earn interest.
Engagement Message
Name one key difference between holding a bond and holding a stock?
There are two main types of bonds: government bonds and corporate bonds.
Government bonds are loans to countries or states (like U.S. Treasury bonds). Corporate bonds are loans to companies (like lending money to Apple or Microsoft).
Engagement Message
Which type do you think would be safer to lend money to?
Bonds are often called "fixed income" investments because they typically pay you the same amount of interest each year - it's predictable and fixed.
Unlike stocks where profits can go up or down wildly, bond payments stay steady (assuming the borrower doesn't default).
Engagement Message
Why might some investors prefer this predictability?
Remember how stocks make you an owner? Bonds make you a lender. Stock owners hope for growth and rising prices. Bond lenders want steady interest payments and their money returned safely.
It's like the difference between investing in a friend's business versus loaning them money.
Engagement Message
Can you think of a situation where lending might be better than owning?
