Should I Invest in Zero Coupon Bonds? Learn more about these unusual investments. Dan Caplinger ( TMFGalagan ) Mar 24, 2018 at 11:46AM Most people think of bonds as being appropriate for those who need regular current income without a huge amount of risk. Yet some bonds are structured specifically not to pay income currently. The special ways in which these zero coupon bonds work can make them appropriate for very different uses than the typical fixed-income security. What is a zero coupon bond? With most bonds, the issuer accepts an up-front payment from investors in exchange for promising to pay interest payments at regular intervals and then repay the principal at maturity. For instance, a 10-year Treasury bond might have a coupon rate of 3%, meaning that each $1,000 face-value bond will make interest payments totaling $30. For Treasuries, that would come in two semiannual payments of $15 each, but the frequency with which issuers pa...