Investing in Bonds
You may be leading a nice and comfortable life now but once you are at the retirement stage, things may not be the same. Many others like you are now asking the question of how to invest my money so that he can put a part of today's hard earned money in a good money spinning or multiplying scheme.
You could think of investing your money in bonds. Here, the issuer of the bond essentially borrows your money and agrees to pay fixed amounts of interest for a specific period of time and when the bond matures, and then he repays the total principal amount. This principal is the net value of the bond, usually amounting to $1000 per bond. It can be compared to an IOU and can also be compared to CDs or Certificates of Deposit and savings account.
Many investors who are wondering how to invest my money, can avail of these bonds as they only loan the money to banks and get an interest as well the basic amount. Your bond issuer could be a corporation or even the government. The investor cannot be compared to a shareholder in a company but rather to a creditor. The difference between bonds and CDs or a savings account is that in the former case, you are permitted to sell the bonds to a secondary market, which is not possible in the latter case.
Every budding business man will definitely wonder how to invest my money safely, and bonds seem to be a great way of reaping regular returns. The face value or par value of a bond is the amount you paid for it at the time of purchase and this is what is given back to you on maturity. The date of maturity is fixed by the bond issuer and on that fixed date, all the bonds are removed from the market and all the investors are paid the par value. This period, however, could vary from one day to several hundred years.
There are short term bonds, intermediate bonds and long term bonds. Those maturing within a year are called the short term ones, the ones ranging from a year to about ten years are called the intermediate ones, and the last category is one that ranges from ten years to about thirty years.
Article Source: FxTradingStock.com
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by: Allan Boyd
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Word Count: 395
Date: Tue, 21 Dec 2010
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