How Bonds Actually Work

Yield, duration, convexity, and why bonds lose value when interest rates rise.

Core Concepts

Bonds are loans you make to a government or corporation. While they offer fixed income, their market value fluctuates inversely with interest rates.

Implementation Strategy

Understanding 'duration' is key: a bond fund with a duration of 6 years will drop roughly 6% in value if interest rates rise by 1%.