Can you answer bob’s question about Bonds?:

I am looking to open a high yield savings account.. E-trade appears to have the best rate of any decent sized bank.. is it a good place to open a savings account? Any other suggestions?

Municipal Bond Interest Rates

Can you answer Leonidas’s question about Bonds?:

Can an SBLC be used to generate capital then use the funds in trade to earn high yeilds?
SBLC = Stand by letter of credit.

Cashing In Savings Bonds

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 issuer’s bonds, you could protect yourself from the possibility that one of the issuer’s 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.



Thanks to Joseph Kenny for contributing this article to our Bonds blog:

How Much Is My Savings Bond Worth

You trust your bank. Are they doing you good deeds? You trust your investments. Are they doing you good deeds? You trust everybody that takes your money and makes it grow into more money. They are all kind of deeds of trust for you aren’t they? Well, thats very trusting of you. Let me ask you, have you ever considered trusting yourself to make money? Thats correct. Trust yourself. Have you ever approached yourself and asked you to take your own money and lend it to someone as an investment to make a profit? Chances are not. As a matter of fact, you probably have not even thought of it.

Have you ever heard of the middle-man? Yeah, I bet you have. He’s that evil monster who stands in between two entities and passes the salt from one person to the next and along the way, collects a commission of salt for his own meal for his or her efforts. And if he or she passes the pepper also, you pay double. Oh yes, we have all heard of the middle man. Sometimes they are called a broker. Sometimes called the processor. Sometimes called the whatever, but no matter what the title, there they are standing there in the middle of the action grabbing dollars bills out of the clear blue sky.

Imagine if you passed the salt directly to the person it was going too. Then you would not have to pay the salt and pepper passer some of your salt and pepper. Then you would have more salt remaining in the shaker when it came back to you. Wouldn’t that be spiffy? A great idea huh? You betcha.

Well, thats the concept of how a Trust Deed works. A trust deed eliminates the middle man and allows you to lend money directly to the borrower. By doing that, you no longer have to pay the middle-man and therefore, simply make more profit or a little thing I like to refer to as money. Thats correct. A trust deed makes you more money because its a process that allows you to lend money directly to another entity. By investing money in a Trust Deed, you are eliminating the bank and lending money direct to the borrower thereby increasing the return on your investment. Remember, Trust Deeds Yield High Deeds of Trust. Trust me.

Cool idea you can trust huh? Yeah. I thought so. Oh by the way, can you pass the salt please?

Internet Resource:

Trust Deeds are available through many Financial Investment firms such as EQlibrium Investments at http://www.eqlibrium.com/ who offers Trust Deeds http://www.eqlibrium.com/products/trust-deeds.asp in their High Yield Investments products section.



Thanks to Tim Cratchit for contributing this article to our Bonds blog:

Us Treasury Savings Bonds

Can you answer Lax4life’s question about Bonds?:

I have mine in an account with a apy of 4.5%. Does anybody here know if there is an account with a higher apy.
with a minimum of 5000 or 6000.

Cashing In Savings Bonds