Advantages of Investing in Bonds Investors buy bonds for a variety of reasons. First, because it can produce an improvement, investing in bonds can improve their return relative to cash. Compared to other investments, such as savings accounts at banks, bonds pay a much higher interest rate. So instead of keeping money in the bank, people can invest in bonds and earn a good interest rate. Secondly, by investing in bonds, investors can earn stable interest income. Bonds provide stable, predictable coupons as income streams. Bonds also offer a predictable repayment of principal at maturity. On the other hand, investing in bonds is also a good risk diversification tool. This is because bonds show low correlation with other asset classes, so the inclusion of bonds can bring relative stability to a portfolio. Additionally, bonds often demonstrate comparable performance to stocks over time, yet with lower volatility. Additionally, bonds have capital gain potential. But the market price of a bond is influenced by market interest rates and the perceived creditworthiness of the issue...