Summary of Bond Basics: Overview

Bonds are the safer cousins of stocks in the investment world. They don't have the glamor of stocks because their earnings capacity is limited. But most investors find a place for them because they offer stability. In bad times, in fact, some investors sell their stocks and buy bonds while waiting for smoother sailing to arrive in the near future.

Like stocks, bonds have risks associated with them. Credit risk and interest rate risk are the two main risks to be wary of when investing in bonds.