How to Invest in Bonds: A Complete Guide

How Bonds Work & How to Invest in Them

By Lyle Daly – Updated Dec 3, 2025 at 1:35 PM | Fact-checked by Frank Bass

Key Points

Investors earn from bonds through interest payments, sale profits, or buying discounted bonds.
Bonds vary by issuer and type, affecting safety, yield, and tax implications.
Bonds provide stable income and are safer but offer lower returns than stocks.

A bond is a debt instrument that a government or corporation issues to raise money. Investors who buy bonds receive a fixed return based on the bond's interest rate. Most of us are used to borrowing money in some capacity, whether it's mortgaging our homes or asking a friend for a few bucks. Similarly, companies, municipalities, and the federal government borrow money, and they use bonds to do it.

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Close-up bond market trading screen with rising yields. Coupons, rates, yields, and other information are displayed. — Image source: Getty Images.

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Bonds

Bonds are debt securities that entitle the holder to receive interest payments.

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Top 8 Bonds to Invest in for the Long Term

Find out why bonds are getting a lot of attention from investors these days.

How to Calculate the Percentage Return of a Treasury Bill

A T-bill is a short-term government debt security that doesn't pay interest, so calculating its return is slightly different.

5 Best Short-Term Bond ETFs in 2025

Short-term bond ETFs can help investors earn modest monthly income while protecting against rising interest rates.

5 Best Treasury Bond ETFs in 2025

Treasury bond ETFs can help investors earn safer, more tax-efficient income on a monthly basis.

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About the Author

Lyle Daly is a contributing Motley Fool stock market analyst covering information technology and cryptocurrency. Lyle has been a contributor at the financial services company since 2018. His work has been featured on USA Today, Yahoo Finance, MSN, Fox Business, and Nasdaq. Before joining The Motley Fool, he wrote for financial brands including Intuit.

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