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Bonds

Typically considered a lower risk investment compared to stocks, bonds can be a way to invest and earn a predictable return through interest payments. Bonds are a fixed-income investment, meaning they provide a set interest payment on a regular schedule to investors. Bondholders can benefit from:

A variety of options from corporations and government issuers
Regular interest payments on your investments
Receiving the face value of the bond at maturity

How do bonds work?

When you purchase bonds, you’re essentially providing a loan to a business or the government. The bond issuer then pays you interest over the course of the bond’s term before paying you back the principal, in full, at maturity.

Great for: Investors who want regular payments and principal protection.

Typical risk level: Low to medium.

Typical investing horizon: short- to long-term.

Example investing goals: Saving for retirement, protecting retirement income.

Why invest with bonds with BMO?

With BMO, you can purchase from three types of bonds. Each is low risk, typically secure, and make great additions to an investment plan. Explore the three types below.

Treasury bills (T-bills) are debt instruments issued by the government and mature in one year or less. Instead of bearing interest, T-bills are sold at discount and mature at par, which is 100% of the face value.
Money market products are debt securities that are issued by the government, financial institutions and large corporations. The securities come in the form of T-bills, commercial paper, banker’s acceptance and longer securities when their term shortens to one year or less.
Coupons and residuals, or zero-coupon bonds, are non-interest bearing bonds. They are purchased at discount and mature at par. This means that no payments are made until maturity, which is when the holder receives the face value of the bond