Bonds were long considered boring. But after the 2022-2024 rate hikes, they offer attractive yields for the first time in years — and remain the most important stability anchor in any portfolio.

What Are Bonds?

A bond is a loan you give to a government or company. You receive regular interest payments (coupon) and your capital back at maturity (redemption). Unlike stocks, with bonds you know exactly what you will get — if the issuer remains solvent.

Bond Types for Retail Investors

Government bonds: Bunds (Germany, AAA-rated), US Treasuries. Safest form, lowest yield.
Corporate bonds (Investment Grade): Bonds from companies with good ratings (BBB or better). Higher yield than government bonds, slightly more risk.
High-yield bonds: Bonds from companies with low ratings (below BBB). Yields of 5-8%, but significantly higher default risk. Correlate more strongly with stocks.
Inflation-protected bonds (TIPS/Linkers): Coupon and repayment adjusted for inflation.

The Interest Rate-Price Relationship

The most important rule: Rising rates = falling bond prices. And vice versa. Duration measures interest rate sensitivity: longer maturity = stronger price reaction.

Bond ETFs: The Practical Solution

Short-term (1-3 years): Low duration, minimal interest rate risk. Ideal as cash alternative.
Medium-term (5-7 years): Good compromise between yield and risk.
Long-term (10+ years): Higher yield but high interest rate risk.
Globally diversified: Vanguard Global Aggregate Bond — broad mix worldwide.

Current Situation 2026

After ECB and Fed rate hikes, government bonds offer real yields above inflation for the first time since 2008. Bunds yield approximately 2.5-3%, US Treasuries 4-4.5%. This makes bonds a real alternative again.

How Many Bonds in the Portfolio?

Classic rule: Age in percent = bond allocation. 30 years old = 30% bonds.
Modern: Depends on risk profile. Conservative: 40-50%. Balanced: 25-35%. Aggressive: 10-20%.

Bottom Line: Bonds are not sexy, but they save your portfolio in crises. Those who held 30% bonds slept much better during the 2022 correction.