Why Bond Market

How Bond Market important

In the traditional financial market, bonds are debt investments where investors lend money to an entity (like a corporation or government) for a fixed period. In return, investors receive interest payments and the eventual return on their principal investment when the bond matures.

According to the Securities Industry and Financial Markets Association (SIFMA), as of 2021, the size of the bond market (total debt outstanding) is estimated to be at $119 trillion worldwide and $46 trillion for the US market.

The reason why Bond possesses such a large marketcap of investment market is it provides a steady, fixed-income stream and portfolio diversification with equities that have higher growth potential but more volatility.

For investors seeking income and relative stability, bonds can be an excellent part of an investment portfolio when their risks are properly managed. They provide more interest than savings account alternatives while avoiding the ups and downs of the stock market. Overall, Bonds are considered relatively stable investments and are attractive to investors looking for steady income streams and lower risk.