What is it?
Bond prices generally move opposite interest rates. Short-term government bonds usually move less than long-term or lower-quality corporate bonds.
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Plain-language guide
Bonds & rate funds
Lend money to a government or company and receive interest.
- Typical volatility
- Lower
- Often used for
- Income, diversification, and matching money to a future date
- Liquidity
- Bond ETFs trade like stocks; individual bonds vary
The same money can move both ways.
Possible gain$1,000 returning 5% becomes $1,050: a $50 gain.
Possible loss$1,000 falling 5% becomes $950: a $50 loss.
Educational watchlist
Examples to learn
These are examples—not Council picks or recommendations.
Total U.S. bond ETF
Broad investment-grade exposure
Long Treasury ETF
Very sensitive to long-term rates
1–3 year Treasury ETF
Lower interest-rate sensitivity
Before investing
What can go wrong?
- Rates can push prices down
- Borrowers can default
- Inflation can erode purchasing power
News that matters
Watch these drivers
- Federal Reserve decisions
- Treasury yields
- Inflation
- Credit downgrades and defaults
Slow down and ask
Three useful questions
- When do I need the money?
- How sensitive is this bond to rates?
- Is the yield worth the credit risk?
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