It helps to think of bonds as an IOU from the government. When you buy a fixed interest rate bond or bond ETF, you are lending money to the government in return for a fixed interest rate (also called a coupon) over time. You can invest in local and foreign government bonds. This post covers the subject in more detail: ETF: Bond ETFs, yields and junk status

Other related posts:

ETF: Your guide to bond ETFs

ETF: Bonds in your ETF portfolio

ETF: Income ETFs III – Bonds and Preference Shares

Related terms in this Glossary:

preference shares