Bonds

Investors who buy bonds lend money to the company for a specified period of time (e.g. 3 or 5 years) and the company promises to repay the loan at a specified time with a fixed interest rate. If you buy a bond, you are in effect lending money to the company and taking a chance that it will be able to pay you back when the time comes. If the Company goes bankrupt before the bond matures (i.e. when the company promised to pay you back), you will have lost all your money. If the company is very successful and goes public, you will not be able to benefit as much as if you had bought shares since you are not an owner in the company, you are a lender or bond-holder.