If you're thinking about starting financial planning but don't know where to begin, looking into bonds isn't a bad choice. Why are bonds gaining attention among investors these days? Because they offer a middle ground where you can expect higher returns than bank deposits but are not exposed to the intense volatility like stocks.

If you ask what exactly bonds are, it's when governments, companies, or public institutions borrow money from investors and promise to pay interest over a certain period. Simply put, it's a structure where you lend them money and receive interest and principal back. It looks similar to a deposit but is a completely different product.

The biggest advantage of bonds is the regular cash flow. You can receive interest payments every three to six months, and if the bond has a high credit rating, the risk of principal loss is almost zero. Government bonds or high-quality corporate bonds offer stability comparable to deposits while providing higher yields.

Another important feature is liquidity. Bonds can be freely sold in the market even before maturity. This means there's no need to worry about early withdrawal penalties like with deposits. In fact, the bond market is quite active, with substantial daily trading volume.

Also, note that bond prices move inversely to interest rates. When interest rates fall, existing bond prices go up; when rates rise, prices go down. You can use this characteristic to predict interest rate changes and aim for trading profits.

There are various types of bonds. Government bonds are issued by the government and are the safest, but tend to have lower yields. Special bonds issued by public enterprises can offer slightly higher returns than government bonds. Corporate bonds are issued by companies, and their yields vary greatly depending on credit ratings, so it's important to carefully check the company's creditworthiness before investing. Investing in overseas bonds like U.S. Treasury bonds can also provide diversification with dollar assets.

Bonds are also advantageous from a tax perspective. When investing personally, only interest income is taxed, while capital gains from trading are tax-free. Some bonds, like ESG bonds, even offer additional tax benefits.

Of course, there are precautions. Remember that bond prices fall when interest rates rise, there's a risk that the issuer may default, and for foreign bonds, exchange rate fluctuations pose a risk. Be especially cautious with corporate bonds that have low credit ratings.

There are three main ways to invest in bonds: buying individual bonds directly through securities firms or banks, investing in funds that diversify across multiple bonds, and using bond ETFs that can be traded in real-time on stock exchanges. For beginners, starting with government bonds or bond ETFs and gradually expanding your portfolio is recommended.

Bonds are particularly suitable for those who need regular cash flow, are approaching retirement, or find stock volatility burdensome. Including bonds in your portfolio can significantly reduce overall asset volatility.

Ultimately, bonds can be a good choice for investors seeking a balance between stability and returns. If you want higher yields than deposits but lower risk than stocks to protect your assets, now might be the right time to seriously consider bonds.