Posts Tagged ‘bonds’
Bonds 101
Posted October 28, 2008 by Bernz
Everyone always talks about stocks and bonds, bonds and stock but are bonds really and how do they work? This little article is here to talk about the largest kind of bonds you can invest in.
Keep in mind that for the individual investor who is working with capital of less than 1,000,000 dollars the best way to invest in bonds is to buy into a bond mutual fund. The only exception is that if your municipality is doing a bond issue for a project and you want to invest in something specifically then that can be fun and help you rise up the social strata of the city but overall even though bonds are traded frequently over the open market mutual funds are the easiest way to get involved in the bond market.
Bonds also have what are called maturity dates. The maturity date is when the entity that has issued the bond buys the bond back from you for face value plus interest or they will pay you part interest over the life of the bond and the rest at the end or they will pay you all the interest over the life of the bond. In any of these cases bonds are generally not volatile. They are issued usually by government entities.
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Tags: bonds, mortgage bonds, savings bonds
Posted in Investing Strategies | No Comments »
Investing jitters? Curb them with government bonds
Posted October 26, 2008 by Bernz
History reveals that in the last 80 years, the U.S. has experienced 13 recessions. But each time America has recovered with economic expansions. In California Gov. Arnold Schwarzenegger is using bonds to stimulate the economy. You could have the same affect in your own investment portfolio if your approach to investing includes low-risk government bonds.
But first a review of bonds. Basically a bond is a loan that you give to a company or in this case, the government to fund an expansion project. When you purchase a bond, the money used to buy it is called the principal. The people who borrow the money agree to pay you interest on your principal. The borrower (aka the bond issuer) also agrees to pay you the principal and the interest on a certain date. That date is called the maturity date.
Government bonds, also called treasury bonds are considered low-risk because they’re issued by the government—city, state, and federal. Financial backing by the government pretty much guarantees that it will not likely default on its promises. Bottom line: The U.S. government has a long and successful track record for being a safe investment.
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Tags: bonds, government bonds, treasury bonds
Posted in Investing Strategies | No Comments »
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