[bɒndz]
Bonds allow companies and governments to raise money, and provide lenders with interest and a final payment of the initial investment at maturity.
Bonds are a type of investment that involve loaning money to a company or government in exchange for regular interest payments and the return of the initial investment at the end of a set period of time. This period of time is known as the bond's maturity date. They are a popular with investors as they often are low risk and provide a relatively stable source of income.
The bond market facilitates the purchase and sale of bonds. Prices of bonds can fluctuate based on a variety of different factors, these include changes in interest rates, the financial situation of the issuer, and overall market conditions. Bonds can be a valuable addition to a diversified investment portfolio.
The regular interest payments (known as coupons) can be subject to Income Tax. Government bonds can be sold and the profit made through the sale is tax-free.
Bonds can be beneficiary for tax purposes for higher income earners as they are taxed at 20% and there also exists a withdrawal allowance, which further reduces tax owed.
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