Immunization (finance)

Immunization is like playing with money to make sure that the bad guys (inflation, interest rates, and volatility) do not rob you of your money.

Imagine that you have a bunch of money in a piggy bank that you want to use for buying toys someday. But you have heard that bad guys called "inflation" and "interest rates" can steal your money away. You don't want that to happen, do you?

So, what can you do?

You can take your money and split it into different parts, called "bonds". Each bond is like a little toy that you put in different shelves of your toy cupboard. Some toys will give you more money, while others will give you less.

You need to play a game to make sure that you have enough money for buying all the toys that you want. The game is called "immunization".

To play this game, you need to make sure that no matter what happens to the bad guys, you can still buy all the toys you want.

So, you start by choosing bonds that will give you enough money to buy the toys. You also choose bonds that will protect you against the bad guys.

For example, you may choose a bond that will give you a lot of money, but only after a long time. You also choose bonds that will give you a little money, but right now. And you choose bonds that will protect you if the bad guys come to steal your money.

By playing this game, you can make sure that you have enough money to buy all the toys you want, without being afraid of the bad guys.