Fixed rate savings bonds

A bond is simply put, a loan on which the issuer is the borrower. The bond holder is the lender and the coupon is the interest. Bonds usually have a fixed period or term, repaid by the bond.

Government bonds are distributed in a different way, they are typically auctioned to the public. The interest rate is normally set for the entire duration of the loan. A firm bond is just a normal bond with a fixed coupon. A strong bond is usually a long-term debt paper that a fixed interest rate. The interest rate is also known as coupon rate and the interest paid on specified dates before maturity of the bond. Fixed rate savings bonds suit people who like to know their money is safe and that it will be returning a set amount each month. A major disadvantage of fixed rate savings bonds are that the money is usually tied up for the entire length of the bond and steep penalties are incurred if you need to withdraw money early.