Mortgage-backed security

A mortgage-backed security (MBS) is like a bond. It's an investment that is backed by mortgages, which are loans that people take out to buy a house. When someone takes out a mortgage, the bank then packages it together with other mortgages and sells it as an investment. The MBS pays out interest to the investor who buys it. This kind of investment is usually considered safe because it is backed by real estate, and real estate prices usually don't go down too much.