Bonds can show very practical to anybody worried about capital conservation and earnings generation. Bonds also might assist partly balanced out the threat that includes equity investing and often are recommended as part of a diversified portfolio. They can be used to achieve a range of financial investment objectives. Bonds hold opportunity but, like all financial investments, they also bring danger.The primary distinction between these two methods of buying bonds also is very important to understand: When you purchase a specific bond and hold it to "maturity," you won't lose your principal unless the bond issuer defaults. When you buy a mutual fund, nevertheless, the value of your financial investment changes daily your principal is at risk.