Advantages: Less riskier then equities provides a secure regular income Disadvantages: provides potenailly far less payback than equity
A bond is simply an IOU. It is an mutal agreement under which a sum is repaid to the investor at some future date. By ownership of a bond you are in turn borrowing money to the person (banks or governments usually) issuing the bond. These bonds commonly pay a fixed rate of interest over a specified time and then repay the par-value after a fixed period when the bond matures. Gilt-edged securities are a form of long-term government borrowing.), or ... ...usually and generally considered as very secure due to many of the issuers being well established institutions also the fact that they are all regulated by the FSA which maintains and controls the financial sector. I believe that bonds provide far more security unlike equity which are generally volatile and can be affected hugely by speculation and poor sector performance. ...