Posts Tagged: ‘bond’

What is a Bond

January 28, 2012 Posted by admin

Bonds do not have the same market place volatility that the share market does.  The attraction of bonds is their predictability that your investment will pay back a return, albeit not as high as shares during a bull run. A bond is your play safe option where you cannot afford to  lose money, as can happen in the share market.

There are many types of bonds available. A bond is issued by either the government of a corporation. When you are considering purchasing a bond you need to look into the various aspects that make up the bond.  The coupon rate is the amount of profit you will make from purchasing the bond on a yearly basis until the bond matures. This coupon rate needs to be measured against other available returns for your investment dollar. Again this comparison should be done with a risk analysis on whether you will retrieve and secure the return on your investment. Often higher returns mean more risk to your investment and the return on investment. The end result should be a comparison of the yield your investment can expect to return to you. The frequency of payment of monthly, quarterly, yearly needs to be aligned to your financial needs.

Another consideration is how long can you afford your investment to be locked in for, which means you cannot access it. If you need money quickly, then investing in bonds may not be the right vehicle for you. The actual price of the bond is another important consideration as is its par value. The par value is the initial investment amount, usually it is about one thousand dollars.  When economic times are difficult investors will naturally flock to bonds as they are seen as a safe haven for money, when economic times are good, people take on more risk, hence more money is placed on the share market and investment opportunities offering higher returns for higher risks.

Tom has been writing for many years now. Not only does this author specialize in financial matters, you can also check out his latest web site at http://rachaelrayreview.org/ which reviews and lists the best Rachael Ray Cookware for your kitchen.

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What Are Bond Mutual Funds?

January 25, 2012 Posted by admin

What’s in a name? Well, with bond mutual funds, the name clearly suggests that it invests in bonds – no question about that. Therefore, if you are thinking of investing in bond mutual funds, then you have to protect your principal loan while paying your income.

This means that you incur more risk whenever you generate the returns but with the bond mutual funds, you get dividends from your interest payment.

Just like with the other mutual funds, bond mutual funds have net asset value or the NAV.

This is the dollar value of your share in the fund and the price that you pay whenever you receive an amount from the buying or selling of your shares in the fund.

Investors opt for bond mutual funds because this means more income for them and a way to diversify their portfolio. Bond mutual funds pay higher dividends compared to savings account and money market.

They are more frequent than the individual bunds as well. When talking risks, bond mutual funds have lower risks and can provide the investor with the stability that he wants and needs in his portfolio.

When the investor has good bond mutual funds, this means that he is stable in the stock market.

But as an investor who is planning to go into bond mutual funds, you should still keep in mind that there are risks involved in this kind of investment. However, this depends on how smart your investments weigh along the stock.

The investments you get from your bond mutual funds may easily be spread out. The key is to not put all your eggs in one basket. In that case, the risk of losing it all is lowered.

Think of bond mutual funds as liquid investments and they flow faster than individual bonds. Shares are sold and bought just like that. But the advantage of this is that these are exempted from taxes – be it state or federal.

There are three kinds of bond mutual funds. These are the US government bond funds, municipal bond funds, and the corporate bond funds.

The returns of these bunds differ depending on the amount of the risks that are inherent in every fund.

If you are going to choose among the three, we suggest that you go for the US bond funds because the inflation rate depends on your debt securities and this is something that you have total control of.

Discover what are the best bond mutual funds at my site. Learn where to buy mutual funds online.

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Bond Mutual Funds- Best For Those Who Want Low Risk Investment

November 19, 2011 Posted by admin

In these tough economic times it is hard for you to trust a particular type of investment. Luckily, mutual bonds offer some sort of shelter during these times and give you a chance to still make money. However, it is advisable that you take your time when you are choosing the type of mutual fund that will work well for you. Investing in bonds is a good idea and this ensures constant interest payments and possible capital appreciation when the bond prices increase.

Bond mutual funds help you achieve this and much more. The middle risk investment venture that pursue strategies that are supposed to give higher returns. Investing in bonds and debt securities is less risky than stocks. They also provide the stability that many investors are looking for and since they are diversified, there is the reduced risk of default. In addition some bond mutual funds are also federal or state tax exempt. They are also more liquid than bonds since they can be bought easily and sold in smaller units. It is not easy to buy bonds and hold them since they are not as liquid as bond funds.  

There are many different types of bond funds. The government bond funds invest in debt securities that are offered by the government such as treasury bills, treasury bonds, treasury notes etc. Then there are the municipal bond funds that invest in securities issued by the state and/or local governments for doing public works like building bridges, constructing schools etc.

Some of these are exempt from federal taxes since they have the backing of the federal government. The corporate bond funds invest in debt securities of corporations. They are a bit more risky than the other two types as they are not backed by the government. Despite this, they pay out a higher income in comparison to government funds.

Mercy Maranga writes content on Finance and Finance Management. Visit her site here for more information on Mutual Funds and how to effectively invest your money. Mutual Funds

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