RECENT NEWS
Clusterstock  6 hrs ago  Comment 
WASHINGTON (Reuters) - Ukrainian authorities met with investors in Washington on Friday as part of an effort to secure agreement on extending maturities of bonds issued by state-run Ukreximbank. In a news release issued following the meeting,...
Forbes  Apr 17  Comment 
Fears that Greece will default on its debts slaughtered its bonds as well as those of its PIGS brethren. Bonds from Portugal, Italy and Spain also sold off owing to worries that if Greece defaults, Spanish, Portuguese and Italian government bond...
SeekingAlpha  Apr 17  Comment 
MarketWatch  Apr 17  Comment 
Greek bank subsidiaries outside their home country have dumped Greek bonds in a bid to minimize the consequences of a potential shock to Greece's financial system, local media reports said. The central banks of Albania, Bulgaria, Cyprus, Romania,...
TheStreet.com  Apr 17  Comment 
NEW YORK (TheStreet) -- Technical charts are painting a favorable picture for bonds, gold, oil and the euro. First, with bonds, the latest decline in the yield of the 10-year Treasury note began on Jan. 2, 2014 when the yield was as high as...
guardian.co.uk  Apr 17  Comment 
UK forced to delay weekly bond sale with FCA vowing to investigate as key financial data provider’s terminals crash Parts of the City of London were left paralysed on Friday after Bloomberg terminals crashed in an IT meltdown that even forced...
Finance Asia  Apr 17  Comment 
State-backed bad debt managment firm keeps the multi-tranche fad alive, raising its second mammoth dual-tranche bond in less than a year.
Insurance Journal  Apr 17  Comment 
The Philippines suffered $13 billion of damage when Super Typhoon Haiyan tore through the country in 2013, a year after another storm killed 1,067. Now, the nation is looking at defraying the costs of future calamities with catastrophe bonds. The...
Financial Times  Apr 17  Comment 
Demographics has sting in the tail for capital markets
The Hindu Business Line  Apr 17  Comment 
Reliance Communications has appointed DBS and Standard Chartered as joint global co-ordinators for an offering of senior secured US dollar bonds. Investor meetings will kick off in Asia...




 
TOP CONTRIBUTORS

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

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki