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Principal

Principal is the original amount of money invested, borrowed or owed before interest or other returns are added. For a bond or loan, it commonly refers to the amount the borrower is obligated to repay according to the terms of the debt.

Why it matters to you

Income is only one part of a debt investment. An investor also needs to understand when and how the principal is expected to be repaid and what could prevent the borrower or issuer from returning it.

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