Should you own bonds?

Wondering how bonds work and whether they belong in your ISA or pension? This beginner-friendly guide explains everything you need to know about investment bonds, bond funds and how they differ from savings products like Premium Bonds.

Bonds are a core part of many investment portfolios, particularly for investors looking to generate income or reduce overall portfolio volatility. But they're often confused with bank savings bonds or NS&I Premium Bonds.

In this video, we explain what investment bonds are, why governments and companies issue them, how bond prices move when interest rates change, and the key risks investors should understand before investing.

In this video you'll learn:

• How investment bonds work
• The difference between government and corporate bonds
• Why bond prices move when interest rates change
• How bond funds work
• Why bonds can help diversify an ISA or pension
• The key risks, including inflation and default risk

00:00 What is an investment bond?
00:21 Why investors buy bonds
00:50 How bonds reduce portfolio risk
01:12 Bond funds explained
02:11 Bonds vs savings bonds vs Premium Bonds
02:56 Interest rates, bond prices and investment risks