Bonds are loans to corporations, governments, and municipalities. When you invest in a bond, you lend your money so they can operate their organizations. Bonds usually have a stated interest rate, and a maturity date when you get your money back. Bonds trade in the open market and are worth more or less than their face value, depending on prevailing interest rates. Interest rates affect housing prices, and everything else that consumers, businesses, and governments do. For this article, all you need to know is that when interest rates go up, bond prices go down.

Over the past 92 years, the S&P 500 has produced gains that average 18% in 3 out of 4 years and losses that average 14% in 1 out of 4. Stocks are a great place to invest if you can wait 3 years or more until you need your money. Everyone has their own ability to stay on course, so we start with a plan, and we stick to it.