The quest to earn money has been one of the basic instincts in man ever since goods were quantified in terms of their value in the marketplace. The habit of saving has always been a wise one; even with basic income, one tries to save wealth for a rainy day. In late 1980s, markets in the United States started yielding high returns, and Wall Street firms were the first ones to introduce the concept of inviting people to invest in corporate bonds that did not have investment-grade ratings.

A bond is a certificate or record which is an evidence of debt on which the issuer or organization promises to pay the investor a specified amount of interest after a certain time period. The government of a country can issue bonds; they can be also issued by business entities or non-profit organizations. Generally, industry analysts opine that long-term bonds pay higher interest than the short-term bonds. In the majority of the markets, it is observed that bonds move in the opposite direction of stocks. If stocks prices are up, bond prices witness a downturn and if stocks prices are down, bonds prices are generally on an upsurge.

Generally, bonds are characterized by the way they pay their interest, the market they are issued in, the currency they are payable in, their protective features and their legal status. There are different types of bonds, some of the commonly issued ones are asset-backed securities. These securities make use of assets which are not tangible in nature. Some scrutiny is done to make these assets available for investment to a much broader range of investors.

Convertible bonds give the holder the right to "convert" or exchange the par amount of the bond for common shares of the issuer at some fixed ratio during a particular period. Corporate bonds are bonds that an individual invests after analyzing a companys performance in terms of profitability and its sustainability in the market.

Extendible and retractable bonds have more than one maturity date. With these bonds, the holder can extend the initial maturity.

An issuer issues a foreign currency bond in a currency other than its national currency. The issuer issues the bond in foreign currency to make it more attractive to buyers and also for taking advantage of international interest rate differentials. Government bonds are bonds issued by a government to finance fiscal borrowing requirements.

Bonds can be a source of steady income. Receiving money at regular intervals can be beneficial in increasing the cash flow, and it is also a good means of additional income for retired people. Depending upon rules set by the governments of various countries, bonds can also have large tax advantages. Although investing in a corporate bond can be risky, if the company is promising, bonds can be a good way of reaping returns over the years.