# 🌾 Lifecycle (Bonds)

By [Let Them Eat Cake](https://paragraph.com/@ltecake) · 2022-06-21

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**TL,DR: Like a vegetable garden, bond payments involve a large upfront investment followed by a stream of rewards that exceed the initial investment**

Bond Lifecycle / Vegetable Garden

*   large initial investment
    
*   predictable moments of repayment
    
*   concludes with a large and bountiful harvest
    

Financials Planting a vegetable garden involves a large upfront investment which includes building the garden, buying the seeds, planting them, and installing a sprinkler system to water them. In the lifecycle of a bond, this is the moment of purchase, when the buyer puts down a large principal amount for the products, usually $1000/bond. After this moment - the rest is gravy. Vegetables appear and grow ripe and ready for consumption. Likewise, bonds will typically make interest payments to the product holders, a bi-annual reward for the initial principal investment. Finally, the harvest arrives and the bulk of the veggies are ready for consumption. In the lifecycle of the bond, this is the moment of maturity - when the investor is paid back the entire principal.

What’s in a Name

Interest payments are named from the latin ‘interesse” which translates to compensation or rate. It’s the fee the issuer pays in exchange for borrowing the principal amount.

Coupon payments are named after the original bond sheets, that featured tearable tabs which could be exchanged at the bank for the agreed upon interest amounts.

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*Originally published on [Let Them Eat Cake](https://paragraph.com/@ltecake/lifecycle-bonds)*