Wednesday 29 February 2012

Investing in Bonds

By Yvonne Brixey


Thinking of investing in bonds? Bonds generally offer safer investing options than stocks, but there are some things you'll need to learn about bonds before investing in them. Bonds are a secure investing option for the most part, but they are not absolutely guaranteed to make you money. Let's look at some of what you will need to learn before investing in bonds.

First, bond investing contrasts with buying stocks in that a bond is a legal obligation by the issuer to pay the bond bearer a certain amount of money at a certain time. Some of those funds are paid in interest, and the remainder are paid at a pre-determined date in the future. This is why many people consider bond investing to be a safer investing choice than stocks. But there can be problems that crop up, for example if a company cannot finance enough growth, it may go out of business and default on its bonds. Also, if you don not hold your bonds to the maturity date, the value of the bonds may decrease if the investing community believes the company is in trouble. This latter problem can even occur with treasury bonds issued by the U.S.A.

So it's important to learn about the bonds you want to be investing in, and fortunately there are many online options you can search to obtain news about the various bond options. Almost every online finance site includes a bonds center, as the bond market is actually larger than the stock market. So it makes sense for the online news brokers to include investing news about bonds. Online news sources such as Yahoo or Reuters have large sections devoted to finance news, and within those sections there will be a bonds center with news dedicated to bond issues.

The easiest way to start investing in bonds is with savings bonds. These are issued by the USA and often available through your bank. Savings bonds are not as popular as they used to be, but are still a valid way to finance your future. Savings bonds generally come in small denominations that almost anyone has the funds for. If you want to invest more funds in bonds, treasury bonds are one of the investing options that are available. Treasury bonds will require thousands of dollars, and probably be safer to keep in a brokerage account. You can check online brokerage accounts for the investing options they offer for treasury bonds.

So, bond investing is a large topic, with the investing options ranging from US savings bonds to corporate junk bonds. Corporate junk bonds are the wild west of the bond market, so you will probably want to stay away from them. But bonds in general are an important part of finance and investing, so taking the time to learn about the options that they offer for your savings is a good way to be investing your time. That way, when a good bond opportunity arises, you'll be able to invest your funds confidently.All You Need to Know About Bonds




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