How are corporate bonds different?
They’re not really. Corporate bonds are just a type of fixed interest security. When you invest into a corporate bond fund, instead of ‘lending’ money to a bank – which is effectively what happens when you place money on deposit – we lend your money to companies who agree to pay a fixed rate of return over a certain period of time. Corporate bonds are issued by different companies at varying rates of return. Generally speaking, the more secure a company is, the lower the return rates it will need to offer to attract investors.
