What Are Bonds and Why Does Smart Money Live There | What the Wealthy Do Ep. 15

Nobody is making TikToks about bonds. Nobody is talking about treasuries going to the moon. But the bond market is two to three times bigger than the stock market. It is the foundation of the global financial system. And if you do not understand bonds, you really do not understand how money works.This is Episode 15 of What the Wealthy Do and the first episode of the Bonds Series. Today Stephanie Dorsey breaks down everything you need to know about bonds starting from scratch, in plain language, no finance degree required.A bond is simply an IOU. Instead of borrowing money from the bank, you are the bank. You lend money to a government or a corporation. They pay you interest every six months and return your full principal at maturity. It is predictable, stable income that the wealthy have always used to preserve capital, generate cashflow, and balance the risk in their portfolios alongside stocks and alternatives.This episode covers what a bond is and how it actually works, the key vocabulary you need to know including face value, coupon rate, maturity date, yield, and credit ratings, the different types of bonds including Treasury bonds, municipal bonds, corporate bonds, international bonds, and savings bonds, the two ways to make money from bonds, why the wealthy never ignore bonds even when the stock market is performing well, and the most common myths about bonds that keep most everyday investors from ever using them.Next week we go deeper into how interest rates and geopolitics affect bond prices. In the coming weeks we will also cover what a potential dollar devaluation could mean and how to start incorporating bonds into your own portfolio.Join the next Sovereign Collective cohort for high-earning Black women ready to build real generational wealth: joinsovereign.coThis podcast provides financial education and not financial advice.