Search:

Would you like to contribute to this site? Bonds Menu Submit an Article Submit a Tip Place your Ad Add URL Bonds Questions? Contact Us  About Bonds   Bond Types   Investing In Bonds   High Yield Bond   Investment Bonds   Bond Investing Tools   401K Bonds   Municipal Bonds   State Municipal Bonds   Muni Bonds   Treasury Bonds   Government Bonds   US Treasury Bond   Premium Bonds   Corporate Bonds   Savings Bonds   US Savings Bonds   Savings Bonds Rates   Savings Bond Services   Series Savings Bonds   Series EE Bonds   I Bonds   Interest On Bonds   Bond Calculator   Bond Services   Buy Bonds   Trade Bonds   Redeeming Bonds   High Yield Savings   HYIP   High Yield Investing   About Investing   Stock Market   Stock Prices and Quotes   Company Stocks and Bonds   Stocks Advice   Stock Services   Tax Bonds   Bail Bonds   Bail Bonds Agency   Investing Help

Return To Bonds Article Archive   Bonds - Investing in Bonds for a secured future By Joseph Kenny There may have been more than one occasion when you might have had to borrow money from a friend: at the coffee shop, in the office, or even for the cab service. When you run out of money, borrowing is usually your only way out. Juxtaposing the same with big corporations and the federal government, one would find it is not that easy for them. Not only have they to repay the money owed, but to top that amount with interest. That is why companies are made to sign a bond by law, promising the repayment of the money owed. It is a formal kind of security to ensure due payment. However, certain criteria ought to be considered before investing in a bond. Let us take a short tour through how investing in a bond could benefit you. Before Investing The working of a bond primarily depends on whether you need to invest money for a long or short term. Besides, it also depends on your tax status, the period and investment goals. There are some basic strategies on hand, which should be considered before making any investments. For instance, putting all your assets and risks in one single asset class would not be a good idea. It is better to diversify the risks by creating a portfolio of several bonds within the bond. By choosing different issuers bonds, you could protect yourself from the possibility that one of the issuers may not be able to pay back the amount owed. After Investing After investing, a par value, or the amount of money the investor receives after maturity of the bond, is calculated. This means the amount (principal) owed should be returned to the investor. The coupon rate is the amount received by the bondholder as the percentage of the par value. Lastly, a maturity date is arrived at wherein the bond issuer needs to return the principal amount to the lender. To arrive at how much a bond would yield, one could divide the amount of interest paid over the course of a year by the current price of the bond. Prices of bonds fluctuate; hence, the current price is always taken into consideration. However, if you decide to sell before the maturity date, it is advisable to do it at the current rate of the market. Types of bonds There are different types of bonds available. For example, government, corporate, agency, mortgage-backed securities, municipal, etc. In addition, different maturity level bonds are also available; these help in managing the interest rate risk. 1. The treasury bonds available from the US government have maturity dates ranging from 3 to 5 months to thirty years. 2. Corporate bonds, on the other hand, which are sold through public security markets, are a little risky and have high interest rates. 3. Local and state government bonds have higher interest rates, as unlike the federal government, there are more chances of them going bankrupt. 4. Foreign bonds are difficult to buy, and is mostly done as a part of a mutual fund. However, investing in them can turn out to be risky. To conclude, even though certain bonds may be risky, or offer a lower rate of interest, buying bonds are a safe option, as they are sound investments. Securing a number of bonds gives the owner a good credit rating and helps to prove his or her financial stability. About the Author: Joe Kenny writes for the Credit Card Guide, offering the latest 0% credit cards, visit today for introductory balance transfers and start clearing credit card debt today. Visit today: http://www.cardguide.co.uk/ Calculate Savings Bonds

Get your Bonds questions answered... Subscribe to our Bonds Newsletter FREE! Your First Name: Your Email Address: Enter above security code

Home  |   Bonds Blog  |   Ask the Bonds Expert  |   Bonds Archive  |   Bonds RSS Feeds  |   Advertise  |   Sitemap