Bonds can prove exceptionally helpful to anyone worried about capital conservation and income generation. Bonds likewise might assist partially balanced out the risk that includes equity investing and frequently are recommended as part of a diversified portfolio. They can be used to achieve a variety of financial investment goals. Bonds hold opportunity however, like all investments, they also bring threat.The main difference between these two methods of purchasing bonds also is very important to comprehend: When you purchase a private bond and hold it to "maturity," you won't lose your principal unless the bond provider defaults. When you purchase a bond fund, however, the value of your investment changes everyday your principal is at risk.