The Economic Times  2 hrs ago  Comment 
Indian bond yield dropped nearly 90 basis in the past six months following stable inflationary expectation and change in the benchmark bond yield instrument.
Financial Times  6 hrs ago  Comment 
Capital inflows of $11.4bn in past week underline partiality for fixed income
Forbes  7 hrs ago  Comment 
But with trillions of dollars in negative yielding debt globally, and long-term interest rates in many developed economies at or below 1%, there is a new risk for investors: Right-minded fiscal policy could actually work.
Benzinga  9 hrs ago  Comment 
Fixed income is one of the hottest corners of the exchange-traded funds industry this year, a trend some market observers believe will continue, particularly as professional investors look for more liquid alternatives to individual bonds. Bond...  9 hrs ago  Comment 
WASHINGTON (dpa-AFX) - Treasuries fluctuated over the course of the trading session on Thursday before eventually ending the day moderately lower. After spending the day bouncing back and forth across the unchanged line, bond prices closed in the...
Reuters  11 hrs ago  Comment 
The Federal Reserve bought $10.901 billion of agency mortgage-backed securities in the week
Wall Street Journal  Oct 6  Comment 
For once, Mario Draghi may have been less reassuring for markets than he could have been.
Wall Street Journal  Oct 6  Comment 
U.K. government bonds were sold off sharply as investors focused on comments from British politicians appearing to criticize central bank bond-buying and talking up fiscal spending.
Wall Street Journal  Oct 6  Comment 
ECB policy makers warned at their September meeting of “increasing challenges” in sourcing bonds for the bank’s quantitative easing program, and hinted that the program could be expanded again.


A bond is a type of debt. It's a loan from an investor to an institution, and in exchange the investor collects a predetermined interest rate. When a company needs capital to expand its business, it issues bonds to the public. Investors buy them with the understanding that they will collect the original principal plus interest when the bond matures at a set date. Federal, state, and municipal governments issue bonds for a similar purpose, to raise money for projects and public programs.

Types of Bonds

Bonds or Stocks?

Making the choice between stocks and bonds can be complex. In general, though, the key consideration is your own planning horizon.

Bonds are, in general, more predictable than stocks, and (on average and in general) give you lower returns. If you believe you'll need predictable access to money over, say, a 20-year period, you may be better off with bonds. For example, if you want to put aside a specific amount of money for a grandchild, expecting that money to be available for college in eighteen years, and not expecting to have other capital available. Insurance companies invest heavily in bonds for just this reason: it matches predictable liabilities (future insurance claims) against predictable cash flows (principal and interest).

Some bonds have tax advantages; for example, municipal bonds are typically exempt from state taxes in the state that issued them, as well as federal taxes. This can make them more attractive, though often you will find that the market has arbitraged away the difference, and that corporate (that is, taxable) bonds carry a higher gross yield -- and the same net yield after taxes. Although many investors invest in munis for just this reason -- they "don't like the taxman" -- they may not be making the optimum investment choice.

Bonds are not riskless, however. They carry credit risk ("will I get my money back?"), prepayment risk, liquidity risk and interest-rate risk. Many bonds give the bond issuer the right to repay the bond early -- which happens more often when rates are low, in other words, just when you don't want your money back. This is prepayment risk. Liquidity risk is the risk that you won't find a good price for your bond when you want to sell it -- because there are so many more bond issuers than stock issuers, and because bonds are not exchange-traded, there may not be a willing buyer. Interest-rate risk is the opposite of prepayment risk: when rates go up, the value of your bond will drop (it drops more, the further away it is from maturity). If your circumstances change and you need to sell the bond before maturity, you can lose capital that you would otherwise receive, if you held the bond to maturity.

Read More

A how to on investing in bonds

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