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Bonds are a good idea for investors who want diversity and safety. Bonds don't cost much to buy or hold, which means you can save more of your money without worrying about inflation eating up your gains. You also get guaranteed income when you own a bond that pays interest periodically throughout its life.

Like stocks, bonds have their risks too - they could go down in value if interest rates rise faster than expected (or fall unexpectedly). However, the difference between both investments is that while stocks produce capital gains or losses based on market conditions at any given time, what you'll get from a bond depends on its coupons.

The return you'll get is based on the price of the bond at the time of purchase, combined with how much interest it pays. This may be different than what you would expect because bond prices can fall if rates rise too fast. For example, if you buy a $1000 face value bond today with a coupon of 5%, your 5 yearly payments will be $50. If rates rise to say 10% the next year, your bond's value drops to $950 because it set you back $1000 but is now worth less due to the interest being paid out.

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