Different Types Of Bonds
Investing in bonds is very safe, and the returns are usually very good. There are four basic types of bonds available and they are sold through the Government, through corporations, state and local governments, and foreign governments.
The greatest thing about bonds is that you will get your initial investment back. This makes bonds the perfect investment vehicle for those who are new to investing, or for those who have a low risk tolerance.
The United States Government sells Treasury Bonds through the Treasury Department. You can purchase Treasury Bonds with maturity dates ranging from three months to thirty years.
Treasury bonds include Treasury Notes (T-Notes), Treasury Bills (T-Bills), and Treasury Bonds. All Treasury bonds are backed by the United States Government, and tax is only charged on the interest that the bonds earn.
Corporate bonds are sold through public securities markets. A corporate bond is essentially a company selling its debt. Corporate bonds usually have high interest rates, but they are a bit risky. If the company goes belly-up, the bond is worthless.
State and local Governments also sell bonds. Unlike bonds issued by the federal government, these bonds usually have higher interest rates. This is because State and Local Governments can indeed go bankrupt – unlike the federal government.
State and Local Government bonds are free from income taxes – even on the interest. State and local taxes may also be waived. Tax-free Municipal Bonds are common State and Local Government Bonds.
Purchasing foreign bonds is actually very difficult, and is often done as part of a mutual fund. It is often very risky to invest in foreign countries. The safest type of bond to buy is one that is issued by the US Government.
The interest may be a bit lower, but again, there is little or no risk involved. For best results, when a bond reaches maturity, reinvest it into another bond.
Basics of Investing
Investing Basics – What Are Your Investment Goals
The Importance Of Diversification
Stabilize Your Current Situation Before You Invest
Basics of Investing
... than you thought you had? 3.) Do you have more shoes and clothes in your closet than you could ever possibly wear? 4.) Do you own every new gadget before it has time to collect dust on a retailer s shelf? 5.) Do you buy things you didn t know you wanted until you saw them on display in a store? If you ...
Getting Your Feet Wet – Begin Investing
... to making your money grow while you learn more about investing. Start with an interest bearing savings account. You may already have one. If you don t, you should. A savings account can be opened at the same bank that you do your checking at or at any other bank. A savings account should pay 2 4% on the ...
What Is Your Investment Style?
... other investors won t take. They invest higher amounts of money in riskier ventures in the hopes of achieving larger returns either over time or in a short amount of time. Aggressive investors often have all or most of their investment funds tied up in the stock market. Again, determining what style of ...
... on the shelves at the grocery store or hardware store. For instance, dog food and cat food costs about 10% less when bought by the case than it does when bought at the single can price and if you wait for close out prices you save a lot more than that. Set aside some space in your home and make a list ...
... of course the date that the bond will reach its full value. On this date, you will receive your initial investment, plus the interest that your money has earned. Corporate and State and Local Government bonds can be called before they reach their maturity, at which time the corporation or issuing Government ...