Bonds represent debt. A government, corporation, or other entity that needs to raise cash borrows money in the public market and subsequently pays interest on that loan to investors.Each bond has a certain par value (say, $1000) and pays a coupon to investors. For instance, a $1000 bond with a 4% coupon would pay $20 to the investor twice a year ($40 annually) until it matures. Upon maturity, the investor is returned the full amount of his or her original principal except for the rare occasion when a bond defaults (i.e., the issuer is unable to make the payment).Bonds lack the powerful long-term return potential of stocks, but they are preferred by investors for whom income is a priority. Also, bonds are less risky than stocks. While their prices fluctuate in the market – sometimes quite substantially in the case of higher-risk market segments - the vast majority of bonds tend to pay back the full amount of principal at maturity, and there is much less risk of loss than there is with stocks.I prefer bonds with stocks.In WWII, the Congress in order to pay for the war, the put up half in cash and the other half in war bonds. Many actors and actresses from Hollywood criss-crossed the country selling war bonds to the public. The response was a success.
See: "World At War" episode "We are on our Way" concerning how the money was raised in WWII.Not exactly one of my favorites in the series.
