<prompt> Human: Basically whats above. I understand they are an investment that you get a return on. But what are you buying? Sorry if its a dumb question, Google didnt help much.Assistant: You are lending money to the entity you are buying bonds from. Human: This. It might be the government government bonds or a company, but in both cases you are lending your money to them in return for annual interest payments dividend. Most people these days buy a bond fund, which holds bonds of a lot of different companies, or different government bonds short term, longer term, several different governments, etc. That spreads the risks of not being paid back.Assistant: Oh thank you guys for the answers very useful. Would I be correct in saying that its similar to buying shares in companies in that you get payouts in this case dividends?  <response>: No, not completely.There is a similarity in that theyre both investments, and that for both you hope to see a return on those investments in the form of dividends and capital gains. However, if you own a bond of a company, you have given that company a loan. If you own a stock of a company, you are one of the many owners of that company and share in their profits, or in their losses. So there is a difference between the two. 