What are bonds?

A bond is like a promise from one person to another that they'll share something valuable later.

Imagine you and your friend want to buy a big toy together, but right now you only have enough money for half of it. Your friend says, "I’ll give you my part now, and when we both get our allowance next week, you can give me yours." That’s like a bond, one person gives something now, and the other promises to give something back later.

Think of a bond like a loan from one person (or group) to another. When someone buys a bond, they're lending money to the person or company that issued it. In return, the borrower agrees to pay back the full amount, plus some extra, at a future date.

For example, if you lend your friend $10 for a snack today, and they promise to give you $12 next week, that’s like buying a bond. You get money now, and they give you more later.

People use bonds because they want to save up for something big, like a house or a vacation, without spending all their money right away. It's like saving in small pieces so that later, everything adds up!