| Today, I want to discuss something that market analysts don't talk about too often. Bonds. Before your eyes glaze over, this is important. Bonds belong in everyone's portfolio. Now, I'm not talking about bond mutual funds or exchange-traded funds. I'll tell you why you should avoid those next week. Today, I want to talk about what you need to know about individual bonds. First of all, what exactly is a bond? It's pretty simple. A bond is a loan that you make to a company or government agency. If we're talking corporate bonds, then you're loaning money to a company for a specific amount of time for a specific interest rate. Bonds are typically sold in $1,000 increments. Bonds have a maturity date and a coupon. For example, if a bond is set to mature on February 1, 2025, and it has a 5% coupon, that means if you lend $1,000 to a company until February 1, 2025, you will receive 5% per year in interest - usually in two payments throughout the year. On February 1, 2025, you'll get the $1,000 back. Now, here's the important part. If you buy or sell a bond in the market, it may not trade for $1,000. When it is first issued by the company, it will. But as soon as it starts trading, the price will vary. So you could buy a bond for $900. In that case, you'll receive more than 5% per year because the 5% coupon is based on the $1,000 figure. No matter where the bond is trading, the bond pays $50 per year in interest. So if you paid $900 for the bond, you'll make 5.6% interest because $50 divided by $900 equals 5.6%. If you paid $1,050 for the bond, you'll make 4.8% because $50 divided by $1,050 equals 4.8%. | 
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