Bonds

Bonds are fixed-income instruments where investors lend money to the government or company for a fixed period of time.  In most cases, the interest rate is fixed. However, there are also floating-rate bonds where rates are reset periodically. The interest could be paid semi-annually, annually, or at maturity, depending on the terms of the bond. On maturity, the issuing entity pays back the face value of the bond to the investor. Besides fixed or floating-rate bonds, there are other types of bonds, such as tax-saving bonds, convertible bonds, and perpetual bonds, to name a few. 

Before investing, it is important to understand the nature of the instrument, terms, and risks involved. Also, one needs to ascertain the credit ratings, payment history, and background of the issuing company. Government bonds carry the highest safety rating.