"'Tis very certain the desire of life prolongs it."Lord Byron
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A Guide to Online Investing
Online investing can be a wonderful way to access the stock market without visiting an investment broker... you can cut out the involvement of the middle man and make all of the pertinent decisions yourself. Unfortunately, many people are unsure exactly ...
Foreclosure And The Durrett Rule
It's probably happened to you...Folks learn that you know something about real estate investing and they eagerly ask you about buying foreclosure property.The general assumption is that they can buy a beautiful home at a deep discount at a foreclosure ...
Rfidinvesting.Com Online Rfid Investor Forum To Feature Public Rfid Companies And Analysts That Follow The Growing Sector
For Immediate Release January 11th, 2005 RFIDInvesting.com Online RFID Investor Forum to Feature Public RFID Companies and Analysts that Follow the Growing Sector Including Symbol Technologies, Inc. (SBL) and Senior Analyst for Venture Development ...
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What are Bonds?
A bond is a debt security, by which you are lending money to a government, municipality, corporation, federal agency or other entity known as the issuer. In return for investing in the bond, the issuer promises to pay you a specified rate of interest during the life of the bond and to repay the face value of the bond (the principal) when it becomes due.
Why Invest in Bonds?
It is always prudent for an investor to maintain a diversified investment portfolio consisting of bonds, stocks and cash in varying percentages, depending upon individual circumstances and objectives. Bonds help you to diversify your portfolio, thereby, reducing your risk exposure.
Investing in bonds provides a predictable stream of income and repayment of principal.
Bonds maturing within three to five years will hold on to the value that they are worth. They offer some protection against stocks related losses in a portfolio.
The negative side of investing in bonds:
All investment products have drawbacks. Bonds are no exception. Some of the negative aspects of investing in bonds are:
Most bonds have a call option. This gives the issuer the right to call back the bonds held by investors generally after five to ten years. When the issuer calls back a bond, it pays your principal back along with the accrued interest and perhaps, a small premium. Issuers adopt this strategy when they can obtain money at interest rates lower than that of the bond in question.
When interest rates go up, the price at which the bond can be sold goes down. If you are forced to sell the bond due to pressing circumstances, you may not back the entire amount invested resulting in losses.
Long-term bonds can tend to be volatile and can somtimes fail to keep up with inflation.
About the Author
Read More Free Investment, Wealth Creation & Personal Finance Articles &
Tutorials from the
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