Understanding the concept of company bonds and how to buy them is crucial for investors seeking to diversify their portfolios and potentially generate passive income. Company bonds represent a form of debt security issued by corporations to raise capital, offering investors the opportunity to lend money to these companies in exchange for regular interest payments and the eventual return of their principal investment upon maturity.
Investing in company bonds offers several notable benefits. Firstly, bonds provide a relatively stable source of income through regular interest payments, which can be particularly attractive in low-yield environments. Secondly, bonds can act as a diversifier within a portfolio, potentially reducing overall risk as they tend to exhibit lower volatility compared to stocks. Additionally, bonds can provide investors with a hedge against inflation, as many bonds offer interest payments that are adjusted based on inflation rates.
