Bonds can prove extremely practical to anybody concerned about capital conservation and earnings generation. Bonds also might assist partially offset the threat that includes equity investing and typically are advised as part of a diversified portfolio. They can be used to accomplish a variety of investment objectives. Bonds hold opportunity but, like all investments, they likewise carry danger.The primary distinction in between these two ways of purchasing bonds also is very important to understand: When you invest in a specific bond and hold it to "maturity," you will not lose your principal unless the bond company defaults. When you invest in a bond fund, however, the value of your financial investment changes day-to-day your principal is at threat.