← Back to Learning Journey
Government Bond
Face Value€1,000
Coupon Rate3%
Maturity10 years
Annual Income€30
You lend €1,000 →
Receive €30/year for 10 years →
Get €1,000 back at maturity
Total return: €1,300 on a €1,000 investment
🏛️

Government Bonds

Issued by nations (US Treasuries, German Bunds, French OATs). Very safe but lower returns.

🏭

Corporate Bonds

Issued by companies. Higher yields but carry credit risk – the company could default.

📊

Bond Ratings

AAA → BBB = "investment grade" (safer). BB and below = "junk bonds" (riskier, higher returns).

📈

Interest Rate Relationship

When interest rates rise, existing bond prices fall (and vice versa).

💡 Why Include Bonds in Your Portfolio?

  • Stability – Bonds are less volatile than stocks
  • Income – Regular coupon payments provide predictable cash flow
  • Counterbalance – Bonds often rise when stocks fall
  • Capital preservation – Ideal for goals within 1–5 years