A bond by any other name (fixed-income security, debt, bills, notes, consols, perpetuities, etc.) is still a written promise to pay the person back what they paid plus extra money. People who have stocks don’t get that nice promise.A bond owner sometimes acts smug by calling a bond a fixed-income security, which means that getting money back is “guaranteed.”
But stock owners return that smugness by stating that they can make a lot more money than with bonds. This is true. The extra risk with stocks means that people stand to make bigger profit with stocks than bonds. But for people who don’t like the merry-go-round stock market, a bond offers a steadier ride.

A bond comes with a predetermined amount that whoever issued the bond pays back to you. This is called the face value or par value. If a bond has a $1,000 face value, you are expected to get $1,000 back when your baby bond grows up, which is on the “maturity date”. Some bonds have a maturity date a couple weeks after they are issued, while other bonds will mature when you have given up pulling grey hairs out of your head.

You know how annoying it is to lend five bucks to a friend? You would be surprised at how long it takes people to pay things back. Bond issuers know this, and they want to grease your palms so you can loan them the money.

A bond comes with a yearly interest rate that the bond issuer pays you in return for your help. This is called a coupon. Let’s say you got a bond with a $1,000 face value and a 5% coupon. The bond’s maturity date is 10 years away. That means that each year, the government or company will pay you $50 every year for 10 years. You would think that doesn’t sound like a whole lot. But hear me out, hear me out! On the maturity date, not only will you get $1,000, but if you’ve been saving your interest money, you now have an additional $500. You can buy a Gameboxstation with it or something.

Sometimes bonds are sent out without coupons. They are called zero-coupon bonds. They sound pretty stupid, right? Well, there’s a reason why they’re also called discount bonds. Instead of regular coupon payments, zero-coupon bonds let you pay less than the face value and you will get the full face value when the bond matures. A zero-coupon bond might let you pay $50 for a bond with a face value of $100 and waiting until the bond matures to get that $100.

PROTIP: Keep in mind that you will probably need to pay taxes on whatever you make to the government. BUT, there are certain bonds that don’t require as many taxes (or don’t have taxes at all!).