Bonds can provide financial security for many investors seeking to grow their wealth and enjoy predictable income from their investments.
What Do I Need to Know About Bond Investments?
If you and your family are considering investing in bonds, and whether you’re a first-timer or a seasoned investor, understanding the bond basics is an important step towards making sound financial decisions. Bonds – simply put – are loans made to companies or the government by investors in exchange for interest payments over a period of time. Although there is no guarantee that an investor will be repaid, historically speaking, bond investments have been safer than other types of investments because they’re backed up by a company’s assets or the government’s ability to collect taxes.
Bonds come in a variety of types, with different risk and reward profiles. One type of bond is a “municipal bond,” which is issued by state and local governments to finance projects such as schools or highways. Another type of bond is a “corporate bond,” which is issued by a company to finance its operations. Bonds can also be “international bonds,” which are issued by borrowers outside of the country in which they’re based. Unlike stocks, bonds have a fixed value and face value – in other words, their value doesn’t fluctuate in the same way that stock prices do.
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