Why do we invest money in a particular busines? It is a question that you should answer first before you start any kind of business. Succesful investors always remember to include every detail on their planning activities– and they have answered every vital question that they should address first.
Many people think of any type of dollar denominated bonds, whether they are U.S. corporate bonds or U.S. Treasury bonds as a safe place to park your money for reliable sources of income stream. In fact, the U.S. Treasury Department on their own website, even tout U.S. Treasury Securities as a “great way to invest and save for the future.”
Not only will we look at what a US savings bond is but also what the US Savings Bond value is also. A US savings bond is a loan to a company or government which in turn agrees to pay it back at a fixed rate of interest over a fixed period of time. So when someone is purchasing a savings bond in the US they are actually lending money to the United States. The price for purchasing such bonds is half of its actual face value. This means that you pay $50 for a bond that’s face value is actually $100.
The term bond has in the past been the generic term for fixed interest stocks with security (the borrower is ‘bound’ to repay capital). Gilts are therefore bonds. However, in recent times the term ‘bond’ has also been used in the name of some equity based investments, for example investment bonds issued by insurance companies.
If you are new to investing perhaps you are not familiar with bonds. Before you get started, you need to understand some of the risks associated with bond investing. Most people assume that all interest-bearing securities are completely risk free, but this is not the case. Even if you know a lot about investing, you may not be aware of some of the risk characteristics associated with bonds.
Junk Bonds - Misnamed?
Junk bonds - more politely known as high-yield bonds - acquired the name as a consequence of their low rating by the major agencies and their high rate of default. ‘Default’ is the failure to repay principal and/or suspension of interest payments.
But a […]
Part II — EVALUATING BENEFITS
In Part I, we examined some of the risks associated with bond investing. Here we’ll look more quantitatively at evaluating the potential rewards.
There are more methods for analyzing bonds than there are bonds, or so it seems. Even so, some are clearly essential to evaluating risk and potential returns. We’ll look at a few here.
When even the Iranian government floats Eurobonds, you know there’s something funny about the term.
They have more predictable characteristics — owing to their fixed maturity (principal repayment date) and coupon (interest rate). But those predictions are fairly technical and sometimes even difficult to follow for the beginner.
