A bond is a essentially a loan you can make to a government, corporation or other entity. Then, that entity pays you back, with interest, to compensate you for providing the loan!
For example, let's say a government municipality wants to build a new bridge. They can take that money out of taxpayer funds. Or, they can issue a bond, where they solicit money now to pay for the bridge, and offer to pay interest to everyone who loaned them the money.
Similarly, companies will often sell bonds in order to raise money to grow their business.
Bonds generally have higher interest rates than bank products because there is a bit more risk here, a company issuing a bond could go out of business. A government issuing a bond could run into problems and not afford to pay up.
However, bonds issued by stable governments such as the United States, or by large, stable corporations are considered very safe. For this reason, bond investments can be less volatile than some other investments and thus better suited for money you need sooner -- in the next 3-5 years.
You could just buy the bonds offered by the government or corporations directly. This means you would be investing in a specific company or government and trusting them to pay the interest to you on the promised schedule.
Examples:
You might decide to do this, but you'll need to buy a specific amount of bonds, assume the risk of trusting the bond producer, and have to deal with deciding which bonds to buy.
Another way to invest in bonds is to invest in a "fund" made up of bonds instead. Many financial institutions offer these funds, which many people invest their money into. The financial institution then takes these funds and buys a variety of bonds with them, according to what type of fund it is.
When you invest in a bond fund, you no longer need to wrestle over the details of individual bond issuers and specific bonds. Instead, you can just pick a broad category of bonds that carry the right level of risk for you, and invest as little or as much as you want. In exchange, the financial institution charges you a small fee, but this can be worth it to reduce the complexity of investing in bonds.
Examples:
Note: all of the above funds have a minimum investment of $3,000, but that doesn't mean you can't invest at all. They have an "ETF" equivalent you can invest in by buying "shares" (typically under $100 each).
Plug in a set number of years and a dollar amount to see how much you would earn in interest.
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Years
Bonds are generally safer for money you need in the next 1-5 years - Because bond investments are typically being paid out by stable corporations or governments, their value is less likely to fluctuate up and down. This means you are less likely to need to withdraw your money when the value is down.
Bonds won't earn as much in interest as other types of investments can over a longer period of time - If you are saving for retirement, an event that might be 15, 20, or even 30+ years away, you can afford to take on more risk in order to earn more over that long period of time. If you invest only in bonds you are leaving money on the table. As the time you will need the money gets closer, you can take money out of other investments and then buy bonds to keep the money safer.