Secure Your Future by Investing in Bonds
April 26, 2009 by How Savings Bonds Work
Filed under About Bonds
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:
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:
Ron Victor is a Expert author for Performance Bonds and Contractor License Bond . He has written many articles like Motor Vehicle Dealer Bond, Mortgage Broker Bond, Utility Bond. For more information visit our site http://www.integritybonds.com.Contact me at ron.seocopywriter@gmail.com.
U.S. Savings Bond Types - EE Savings Bonds, Series I Bonds, Series E Bonds
March 12, 2009 by How Savings Bonds Work
Filed under About Bonds
Thousands of people across the country are invested in the U.S., not just legally through taxes, but by choice through U.S. Savings Bonds. A savings bond is a note that is issued by the government to recognize that they owe the buyer money, in essence the people of the United States who buy Savings bonds are loaning the government money. The government, in turn, has agreed to pay the lendee back within a certain period of time at a particular rate of interest.
EE Saving Bonds
EE bonds are very popular U.S. savings bonds. These bonds are not transferable and gather interest for up to thirty years after the issue date, so they make good gifts for family or a good method to begin a savings for children, as there is a penalty for cashing the bond within the first five years. Some more interesting facts about EE bonds:
* They come in denominations of $50 , $75 , $100 , $200 , $500 , $1,000 , $5,000 and $10,000. * They were first issued in January 1980 * They are purchased at half of their face value and accrue interest until they are cashed, up to 30 years. Series E Bonds
These savings bonds are also known as ‘War bonds’ because they were issued starting in May of 1941. E bonds were replaced by EE bonds in 1980 and were the longest running bonds available to American investors. They come in denominations ranging between $25-$10,000, and they are also non-transferable. Some issuing facts:
* They are purchased at 75% face value * Bonds purchased between 1941-1965 carry their interest for up to 40 years * They have a guaranteed mimimum investment yield of 4 percent compounded semiannually for those with maturity periods after March 1, 1993.
Series I Bonds
I bonds are relatively new, having been issued first in 1998. They were issued to protect investors from inflation, and therby have a unique interest rate calculation based on the inflation rate and the fixed interest rate that the government sets twice yearly. I bonds can be purchased in denominations that range from $50 to $10 and are purchased at face value. They accrue interest monthly and compound interest for up to thirty years. Other interesting facts about I bonds:
* They can come in book-entry or definitive form * Can be purchased through banks or through your employer * investors cannot exchange I bonds for HH bonds * They must be held for a minimum of 12 months
Thanks to Mike Singh for contributing this article to our Bonds blog:
EE Saving Bonds
EE bonds are very popular U.S. savings bonds. These bonds are not transferable and gather interest for up to thirty years after the issue date, so they make good gifts for family or a good method to begin a savings for children, as there is a penalty for cashing the bond within the first five years. Some more interesting facts about EE bonds:
* They come in denominations of $50 , $75 , $100 , $200 , $500 , $1,000 , $5,000 and $10,000. * They were first issued in January 1980 * They are purchased at half of their face value and accrue interest until they are cashed, up to 30 years. Series E Bonds
These savings bonds are also known as ‘War bonds’ because they were issued starting in May of 1941. E bonds were replaced by EE bonds in 1980 and were the longest running bonds available to American investors. They come in denominations ranging between $25-$10,000, and they are also non-transferable. Some issuing facts:
* They are purchased at 75% face value * Bonds purchased between 1941-1965 carry their interest for up to 40 years * They have a guaranteed mimimum investment yield of 4 percent compounded semiannually for those with maturity periods after March 1, 1993.
Series I Bonds
I bonds are relatively new, having been issued first in 1998. They were issued to protect investors from inflation, and therby have a unique interest rate calculation based on the inflation rate and the fixed interest rate that the government sets twice yearly. I bonds can be purchased in denominations that range from $50 to $10 and are purchased at face value. They accrue interest monthly and compound interest for up to thirty years. Other interesting facts about I bonds:
* They can come in book-entry or definitive form * Can be purchased through banks or through your employer * investors cannot exchange I bonds for HH bonds * They must be held for a minimum of 12 months
Thanks to Mike Singh for contributing this article to our Bonds blog:
