When you hold a bond, you are buying the debt of a corporation or other entity, such as a government entity.

As a bondholder, your rights are determined by the bond issuer and defined by contract. Your rights as a bondholder include:

- Being paid a defined amount of interest, determined by the terms of the bond

- Being paid that interest for a defined period of time

- Being able to redeem your bond at maturity

- Being able to redeem your bond upon the issuer defaulting

Bondholder rights differ from shareholder rights, or the rights you would hold as a stock owner.

- Bondholder rights are defined by contract. Shareholder rights are mainly defined by state corporate law.

- You have no vote in the direction of the company, should you be holding a corporate bond. A shareholder does have a vote toward company direction.

- You never reap in the company’s profits, beyond the defined rights of your bond and what it will pay. If a corporation suddenly increases greatly in value, your corporate bond will not reflect the company’s new wealth. A stockholder, on the other hand, would see a gain in his or her investment when the company’s holdings do well. (Obviously, a stockholder also takes a loss when the company takes a loss.)

By agreeing to the contract of your bondholder’s rights, you are agreeing to accept stable and regular income, over time.

Find out more about investing in bonds at http://www.investinginbonds.com. You may also want to visit CNNMoney.com for a good article about the basics of bonds. Another online resource for facts about bond investing can be found at http://www.bondsonline.com/.