This is the first article in a series on investment basics. If you are new to investing, it is recommended that the articles be read in order.
Prior articles introduce terminology that is used in later articles.
Over time, bonds cannot compete with the potential growth of stocks. When you purchase a bond from the issuer, you are lending money to the issuer of the bond. The issuer may be a corporation, a government agency, or a municipality. In return for your loan, the issuer agrees to pay a stated annual interest rate to you. Further, bonds represent a loan for a given period of time after which the issuer promises to repay the loan.