Financecalendar_todayLast updated: Apr 2026
What is Bond?
/bɒnd/
A bond is a loan that an investor makes to a borrower — typically a government or corporation — in exchange for regular interest payments (a coupon) and the return of the principal at a set maturity date.
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Everyday Example
Buying a UK government bond (gilt) for £1,000 at 4% for 10 years means the government pays you £40 per year for 10 years, then repays your £1,000.
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“When governments borrow to fund deficits, they issue bonds. The UK national debt is essentially the accumulation of all outstanding government bonds.”
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Did you know?
The first government bonds were issued by the Bank of England in 1694 to fund a war with France. They were called "gilts" because the certificates had gilded edges.
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Key Insight
Bonds are considered safer than stocks because bondholders are paid before shareholders if a company goes bankrupt. This safety comes at the cost of lower long-term returns.
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