For any financial plan, bonds are the core element to invest and grow wealth. It can be defined as a debt security. When you purchase a bond, you are lending money to an issuer such as government, municipality, corporation, federal agency or other entity. In return for that, the issuer promises to pay you a specified rate of interest during the life of the bond and to repay the face value of the bond when it “matures,” or comes due. It is best to invest in bonds because one will get a predictable stream of payments and repayment of principal, with interest.

There are different types of bonds for you to choose. It includes municipal bonds, corporate bonds, mortage-backed bonds, surety bonds etc.Surety bond is an agreement among three parties the principal, oblige and surety. In construction companies surety bonds are frequently used. A key term in nearly every surety bond is the penal sum, and it is specified amount of money which is the maximum amount that the surety will be required to pay in the event of the principal’s default. This allows the surety to assess the risk involved in giving the bond; and the premium charged is determined accordingly. If the principal defaults and the surety turn out to be insolvent, the purpose of the bond is rendered futile. The principal will pay a premium in exchange for the bonding company’s financial strength inorder to extend surety credit. In the event of a claim, the surety will investigate it and if it turns out to be a valid claim, the surety will pay it and then turn to the principal for reimbursement of the amount paid on the claim and any legal fees incurred. There are mainly two categories of bond types: contract bonds and commercial bonds. Contract bonds guarantee a specific contract and it includes performance, bid, supply, maintenance and subdivision bonds. Commercial bonds guarantee per the terms of the bond form and examples are license & permit, union bonds, etc.

A surety bond issued by an insurance company to guarantee satisfactory completion of a project by a contractor is performance bond. Many performance bonds give the surety three choices they are; completing the contract itself through a completion contractor ; selecting a new contractor to contract directly with the owner; or allowing the owner to complete the work with the surety paying the costs.

A bid bond guarantees the owner that the principal will honor its bid if awarded the contract. If the principal refuses to honor its bid, the principal and surety are liable on the bond for any additional costs that the owner incurs in reletting the contract. The penal sum of a bid bond is often ten to twenty percent of the bid amount. In the case of payment bonds it gives guarantee to the owner that subcontractors and suppliers will be paid the monies that they are due from the principal.

If you need a good return in your requirements for any of your needs then the best investment is in bonds.



Thanks to Ron Victor for contributing this article to our Bonds blog:

Tax Free Municipal Bonds

The security ranging term of convertible bond is between 25 & 30 years, providing the owner authority to aquire the issuers’ common stock directly from the issuer before purchasing it in the open market.

Convertible bonds are termed as subordinated debt & are risky than unsubordinated debt.

Features in structure of a convertible bond are: conversion price (price paid per share to attain the common stock of the issuer), conversion ratio (this ratio verify the number of shares the bond holder will collect per bond they exchange), parity (conversion parity is not the point at which profit, nor loss, would be made. Parity exists when the conversion ratio at issuance is equal to the convertible security price divided by the market value of the stock) and conversion premium (the conversion premium quotes the stretch among the conversion price and the current market value in percent. For instance, if a stock is currently trading at $50 per share and the bond conversion price is $60, the bond would be said to be trading with a 20% conversion premium).

Convertible securities offer the issuers to reach lower fixed costs for borrowing. Issuers save a usual of 2% on the yield that they give their convertible bondholders.

Secondly, during the issuance of convertible debt, issuers circumvent dilution of their common shares and higher stock prices for their shareholders by checking the indices. The information must be taken from brokers to recognize if the interest expense of the convertible debt issuance would be less than the cost of diluting the common stock. This information is very important for tax givers in the city.

Issuers can yet insert their own call protection feature into the bond permits them to call the bond back in if the company starts to increase their earnings. The call feature allows the issuer to compel the bondholder to convert their bonds at a lesser price.

A primary drawback to the issuer of a convertible bond exists if the stock price increases so quickly that the exchange takes place in a comparatively small time. This specifies that the company did not do a fine job of valuing themselves; but it is a win-win for both parties. A more off-putting situation, exists when the common stock decreases after issuance. The bondholder will not convert to equity as the issuer had hoped In this case.

Convertible bonds are a better investment than buying common stock. They are less volatile. They offer tough downside protection in a bear market

They can be detrimental in a way that the bondholder will be receiving significantly lesser yield to maturity in contrast to the non-convertible equivalent. This happens only when the issuer’s equity does not attain the upward price projections.

Furthermore, the capability for assumption is significantly decreased when a call provision is involved with the convertible bond. This restricts the upside and will oblige the bondholder to quit their bond at a discount to market.

Convertible bonds benefit the investor having lower risk and lower yields, however permits the investor to obtain benefit from higher stock price. Open research should be done to understand if the security will work for you. Keep in mind that a convertible bond sells at a premium to the value of the stock. The bond holder is making a trade off; lower yields upfront for anticipated gains in the stock price. If these gains are not attained, the bond holder will forfeit the yield among the convertible and non-convertible security.



Thanks to Patricia Stevens for contributing this article to our Bonds blog:

Unclaimed Premium Bonds

With the cost of living going up, gas prices skyrocketing, and people losing jobs,etc. the need for assistance and direction became evident. Cash Savings 2003 an online super site was born.

A few years ago while surfing the web for job assistance an idea was born to create a true one stop site just for adults only. Realizing how vast the internet is and how overwhelming it can be for the average individual with limited time,the creator of Cash Savings 2003 at set out to build a major marketplace that would be simple in design but helpful. The idea of streaming the basic needs of the common surfer at times proved to be extremely demanding.

To build a site of this magnitude one must find out what the people want. Questionnaires were sent randomly to ages that ranged from 18 and above. Many agreed that there were many online shopping,travel, and entertainment deals but they didn’t know where to look. The need for services and direction was the other request. A large majority of the public uses the internet as a source of information.

Cash Savings 2003 brought in not only the hottest companies and services,but offered many smaller shops and business services an opportunity to be located on one site. One of the largest online job search sites was built as well. Cash Savings 2003 was to stay in tuned to the needs of the time and people. Saving the people money and time is the overall concern of the staff of Cash Savings 2003 who scoured the web daily looking for the best internet deals available to provide.

The idea was also to create a place where not having money wasn’t always an option .The theme of the site reflects that of a fun marketplace , therefore there are plenty of free games, entertainment , and even one of the best dating sections for adults. Cash Savings 2003 brought in over 7000 top retailers and services with the idea to help provide a true one stop experience for the public.



Thanks to Gabby Laine for contributing this article to our Bonds blog:

Making Money Online

College education is important. It is an investment that yields huge lifetime dividends. Someone who earns a college degree definitely earns more than those who do not reach college. However, getting into college is not easy for most families. The big amount needed to fund a student’s college tuition and other expenses is not that easy to get.

A four-year college degree right now ranges from $60,000 to about $120,000. Those amounts include other expenses such as housing, transportation, books, and emergency funds. Average families may find it expensive that sometimes, their children don’t get into college anymore.

But that should not happen. There are several ways available to be able to save up for your kid’s college tuition and other expenses. To help you decide on which among the different saving techniques to do, here is a guide that gives you the advantages of each saving technique.

1. 529 Plans- This is one of the most popular ways of saving for college. 529 plans are investment accounts managed by the state, which is open to everyone. 529 plans are flexible as the funds can be used to pay for the tuition or other school expenses such as housing, books, other fees. 529 plans also allow for the funds to be used either in private or public school, or even in vocational or international colleges. With a 529 plan, the control of the money is in the account holder even when the beneficiary already turns 18.

2. Prepaid College Plans- Also known as Prepaid Education Arrangements, this plan allows parents to take advantage of the current in-state college tuition fee. The amount of the plan depends on the number of years left before your child turns into college. Thus, the earlier you start with the plan the better. The plan also allows out-of-state college choices; however, the rate will follow the in-state prices.

3. Coverdell Education Savings Account- Previously known as the Education IRA, Coverdell ESA Plan is yet another option for parents to save for their child’s education, including elementary and secondary schools. This plan can be combined with the 529 plan and prepaid college plan; however, the maximum allowed annual contribution is only $2,000.

4. Government-issued savings bond- The bonds series EE issued by the government can also be used for education. These bonds are offered at discounted rates and earn interests until maturity. If used for education, the principal and interests are all tax-free.

5. Internet sites/private companies- There are savings tools that can also be found in the Internet. One example is Upromise. This company allows the members to earn savings by purchasing items from their affiliate grocery stores, restaurants and more. This free money accumulated can be used for the child’s education expenses. Although small, it may be enough to buy your child books and school supplies.

There are indeed several choices you can choose from. Yet another option that may work for you is to start saving personally. Try to get a specific amount from your monthly income and keep it as savings for your child’s education. The earlier you start, the better, as you will be able to save more and your savings will also earn interest over time. Saving $200 a month once, you give birth to your child can let you save at least $43,200 when your child turns 18. That may already be enough to get your child into a public college institution. This requires commitment and dedication, though, to accomplish this task.

It is up to you to decide which one to go with. All of them, anyways, have the same purpose - to let your child get into college. Any average family can definitely find a savings technique that best suits its budget.



Thanks to Richard Callaby for contributing this article to our Bonds blog:

Tax Free Government Bonds

Let’s be honest with ourselves, saving bonds are not as risky or as exciting as stocks, but, isn’t that basically the point? While there’s pretty much no such thing as a no-risk investment, chances are, a savings bond is about as risk-free as your going to get, especially US savings bonds. Chances are, you or someone you may know, was probably given one as a child. The unfortunately part of this all is that the popularity of these investment vehicles have been on a slow decline as few people are totally aware of there benefits. There is a reason why most of the successful stock market millionaires also hold a position in US saving bonds. There’s a very good reason for it.

What is a US Savings Bond?

Saving bonds are pretty much a type of long term investment that used to be fairly popular. There are quite a few different types of savings bonds out there, but these types of saving bonds are without a doubt the most reliable, being backed by the US government in guarantee and quality that is something that plays on the positive aspects of a US savings bond. In simple terms, a savings bond of this type is essentially a loan to the US government and the bond itself is a guarantee that the ‘loan’ will be paid back in full after a set duration of time during which time, the bond will mature.

Where Can I Buy a US Savings Bond?

If you’re looking for a savings bond, then the best place to acquire one would probably be from your local bank. Savings bonds can be purchased for a set amount for a set fee. In most cases, the fee is half the amount of the total value of the bond, so they are essentially a fantastic way of saving money for something long term without all the hassle. This is why US saving bonds have been determined to be a top investment choice, one of the most reliable and predictable of bonds. In short, the best place to acquire a US savings bond would be from your local bank.

How Long Must I Wait Before Cashing in My Bond?

Depending on the type of bond you purchased, the maturity date will vary. Knowing the type of savings bond before you purchase is always an intelligent move. Since you purchase your I-bond at face value and receive interest annually, you will be able to cash in at anytime after 12 months from the date you purchased it. However, it is important that you keep in mind that if you cash in your I-bond within the first 5 years, there will be a 3 month interest penalty. This is to encourage long term savings. As for Series EE Bonds, if you hold till maturity, you will not get any interest on your investment after that period. So remembering your maturity date is very important. You can cash in a Series EE Bond at anytime after 12 months of purchase date.

Saving bonds are not the type of thing just anybody can get into. Some people are more interested in the type of investment they can get a quick return from, and that is okay, just not ideal for US savings bonds. Despite this, it is a great way of getting your feet wet as far as making investments go, and putting some money away for a rainy day.



Thanks to Uchenna Ani-Okoye for contributing this article to our Bonds blog:

Us Savings Bond Interest