Bond Investing

That article is about Bond Investing. If you want a safe investment and want to grow your money as well, you should invest in bonds. Bonds are sold by companies, federal agencies or government and these are a type of loan certificates. Some companies sell bonds to raise money. If a company wants to expand its business then it sells bonds at various interest rates so that maximum people invests in their company. Some of the main features of bond investment are:

Bond Investing

Wealth Preservation: If you invest your money in bonds then you will not lose a single penny from your principal amount. Instead you will get interest on your money. After the maturity period you will get your money back with interest. Investment in bonds is 100% safe. You will not suffer any loss if you purchase bonds.

Interest: Interest on a bond depends upon the time period. Short term bonds have lower interest rate. Suppose you purchase a bond having price $1000 with 8% interest and maturity period of one year. You will get $80 as interest in one year which means $40 after every six months. Long term bonds have a higher rate of interest than short term bonds. Rate of interest also depends upon the financial condition of company. Remember one thing that if a bond has high interest rate then it also carries more risk than other bonds.

Maturity: Depending upon maturity, bonds are of three types:

Short term bonds: Bonds which have a maturity period of up to five years fall in this category.
Intermediate bonds: These have a maturity period of 5 to 12 years.
Long term bonds: Bonds which have a maturity period of 12 or more than 12 years.

You should invest in long term bonds because you will need this money in old age to meet your family responsibilities like higher studies or marriage of children. You will also get some relaxation in tax if you invest your money in bonds. Collect complete information about bonds before investing. You should take the advice of a professional before investing your money in bonds.

Leave a Reply

Your email address will not be published. Required fields are marked *