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Channel News Asia  Apr 26  Comment 
Asian stocks edged up on Thursday as robust corporate earnings helped Wall Street quell concerns over a surge in U.S. bond yields, while the dollar hovered near three-month highs against a basket of currencies.
Financial Times  Apr 26  Comment 
Shared office space provider sells $702m of seven-year notes at 7.875 per cent yield
WA Business News  Apr 25  Comment 
The Australian dollar has fallen to a new four month low as the US dollar rallies against most major currencies after US Treasury bonds broke the three per cent mark.
MarketWatch  Apr 25  Comment 
WeWork Cos. sold $702 million in bonds Wednesday, becoming the latest startup to win over debt investors despite a cash-burning history that is atypical for a bond issuer.
Channel News Asia  Apr 25  Comment 
U.S. equity futures pointed to a fifth day of losses for the main indexes on Wednesday, spooked by a rise in bond yields and nerves ahead of earnings from scandal-hit Facebook.
MarketWatch  Apr 25  Comment 
U.S. stocks opened with slight gains on Wednesday, as major indexes stabilized following a sharp decline in the previous session but as rising bond yields continued to be monitored as a possible risk. The Dow Jones Industrial Average rose 0.2% to...
Clusterstock  Apr 25  Comment 
Global markets are looking for an "excuse" to sell off, Societe Generale's bearish strategist Albert Edwards says. This week's move in US 10-year yields above 3% — for the first time since 2014 — could be the catalyst required. "Perhaps...
MarketWatch  Apr 25  Comment 
The yield on the 10-year U.S. Treasury note sweeps further beyond the 3% handle on Wednesday, notching a level not seen since late December of 2013, as traders increasingly bet the Federal Reserve will have to raise interest rates more...
Reuters  Apr 25  Comment 
Japan's Asahi Mutual Life Insurance Co plans to invest 100 billion yen this fiscal year in foreign currency bonds without hedging, or 'open' foreign bonds, and also cut exposure to dollar assets, a senior company executive said on Wednesday.




 
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.

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A how to on investing in bonds

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