re: Bonds. Explanation needed.

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So buying a long term bond is always a complete guess?

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Buying bonds can be a great tool if you want a way to make a smaller, but less risky return for a given time period.

If you buy a $1,000, 10 year bond at a 5% interest rate, you will get $50 per year for 10 years, and $1,000 in 10 years. That isn't a guess.

The guess is if you decide to sell it in 5 years.

If market interest rates moved from 5% to 6%, you would sell that $1,000 bond for less than $1,000. If the market interest rate moved to 4%, you would sell that bond for more than 1k at year 5.

That is where the guess is, but there is no guess at all if you plan to hold till maturity. Unless the company defaults, you will get exactly what was stated (with the one exception if there is a clause allowing for early payment, think refinancing mortgages but for the company).