CD vs Bond: Which Fixed-Income Choice Wins for You?
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Key terms
- BondA fixed-income investment where an investor loans money to an entity (government or corporation) that borrows the funds for a defined period at a fixed interest rate.
- Debt-to-Income Ratio (DTI)The percentage of your gross monthly income that goes toward paying debts. Lenders use DTI to assess your ability to manage monthly payments and repay borrowed money.
- Fixed-Rate MortgageA mortgage where the interest rate remains constant throughout the loan term, providing predictable monthly payments. Most common terms are 15 and 30 years.
- Gross IncomeTotal income earned before taxes and deductions. For individuals, it includes wages, tips, investment income, and other earnings.
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