Bonds: Bonds for Safety and Income

This chapter highlights passively managed bond funds that are not shifted around maturities or bond types through active fund management. It also outlines the immunity to all of the bond risks where brokerage window may allow one to either buy bonds directly from the secondary market or buy a suitable long-term Treasury bond fund. A bond is a loan. The borrower makes periodic interest payments over a certain amount of time before returning the initial loan to the lender. The bond market is probably one of the most complex pieces of the investing world to understand. The main problem is that there are many types of bonds and many types of overt or very subtle risks in bonds. Treasury bonds provide the strongest protection during deflationary events and also robust returns when times are good. Buying and holding bonds directly are the best and safest way to have exposure to Treasury bonds.