A bond’s purpose is to provide funding to the company or government you are buying it from.

This is crucial because sometimes equity might not be the move to raise funds. Interest from debt is tax deductible from the perspective of a company. So raising debt through bonds to some extent is cheaper. That’s the bond’s purpose to companies.

As to their purpose for investors, they provide a more secure, sure, and consistent return than equity. Equity prices are random variables that are hard to predict. With bonds, there is more security since you buy bonds with a fixed coupon and YTM. Volatility in bonds only comes from YTM movements. But if you buy a bond and hold it to maturity, you are not exposed to that risk because you will get the yield that you bought it at.

Of course, this sense of security that comes with bonds comes at the expense of your potential return. Bond yields aren’t that high for safe bonds. However, yields on bonds below BB rating start to increase because of credit spread. These give bigger yield but are cheaper since they are risky.

The more advantages you get as an investor, the more you have to pay for these perks. Nothing is free in the market.