Booyah Breakdown: Bond With Bonds

So you get your interest payments every six months and sure enough, three years later you also get your $5,000 back (apparently, he isn't willing to part with his bike).

Well, that's basically how the bond market works (without the motorcycle).

If you buy a bond, you're basically lending the issuer of the bond some money. He will then pay you some interest -- usually twice a year -- as your bonus for lending him money.

Now, no matter what kind of bond you buy, they all have a few things in common.

Every bond has a "face value," which is the principal portion of the loan. These days, its either $1,000 or $5,000. That's also the amount you generally pay upfront for the bond and it's the amount you'll get back from the issuer on the day your loan is over.

Now when your loan ends, the bond folks say your bond has "matured." (Just like your brother.) So let's say you buy a 10-year bond with a $5,000 face value. Your bond will come due -- or mature -- 10 years from the day it was issued. And on that final day, you'll get your $5,000 back.

These days, maturities can be as long as 30 years or as short as 2 years.