This is Planet Money from NPR.

Hey everybody, this is Planet Money Summer School.

Six lessons on investing that you can take with you anywhere, literally in your ears.

Today is class number four, investing in bonds.

And the place to start is with how bonds are different from stocks.

So when you buy a stock, you get part ownership in the company.

So the stock price will swing up or down based on how well the company is doing.

But when you buy a bond from a company, you don't get any ownership.

What you get is a promise of being paid back your money after a fixed period of time.

Plus you get regular interest payments.

In other words, it's like you're giving a loan to the company.

So hypothetically, if I buy a 10-year bond from Microsoft for, let's say, $100.

It just means that at the end of 10 years, Microsoft pays me back my $100.

And each year between now and then, it also pays me, again, let's say, $5 a year in interest payments.

That's it.

And you could also invest in government bonds like US Treasuries.

And it works pretty much the same.

And to cover everything more complicated than that,

we have brought in a Planet Money Summer School professor who specializes in bonds.

Okay.

My name is Vicki Bogan.

I am an associate professor in the SE Johnson College of Business at Cornell University.

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