Okay, so last week I rambled on a bit about making money in this bonkers market, and I threw out some ideas like selling covered calls and naked puts—basic stuff. But I get it, some folks can’t be bothered with all that daily stock anxiety and want a more “buy it, shove it in a drawer, and forget about it” plan.
Enter: bonds.
Yeah, I know, bonds can sound about as thrilling as watching paint dry, but hear me out. They’re simpler than they seem. Stocks? You’re buying a slice of someone’s dream. Bonds? Nah, you’re lending them cash with a pretty legit IOU attached. And guess what? Creditors—yup, that’s you in bond terms—get priority. Like VIP status. If the company screws up, creditors can practically waltz in and take things over.
So here’s the nitty-gritty. A bond’s a deal between a company borrowing your cash and you lending it. They owe you interest on set days, and then your money back when the bond “grows up” a.k.a. hits maturity. No backsies. If they flake, it’s bankruptcy time, end of story.
Stocks can go up, go down, might give you a nervous breakdown. Bonds? Doesn’t matter if they fluctuate because at the end, you get your grand back per bond. They can’t just not pay, that’d be defaulting, which is bad news on their end.
Look, bonds are kinda like that cozy sweater in your closet—dependable. High-grade ones, they’re solid—they barely ever default. We’re talking like less than a 1% chance. And the riskiest ones? Those junk bonds? Only about 4% flake out. Those percentages sound like a good night of sleep, am I right? Anything rated B- or higher is clutch.
And here’s the best part about bonds—no surprises. You know exactly what cash you’ll pocket over the bond’s life. Stocks? Keep dreaming. But bonds, they’re predictable pals.
Let’s play math for a sec. You snag a bond at a sweet discount for $950, due to mature in two years, with a nifty 5% coupon rate. That’s $50 a year, split into $25 checks, twice a year. And you get the bond for less than face value. So not only do you bag $100 in interest, but you also make a cool $50 in capital gains when it matures at $1,000. Total 15.8% return or, like, 7.9% annually. And you knew that even before you clicked buy. So satisfying.
If watching stocks jump up and down like a hyperactive jack-in-the-box is stressing you out, maybe give bonds a go. They’re like that comforting cup of tea when the world’s a storm outside. Safe, stable, warm fuzzies included.
