The Economic Times  1 hr ago  Comment 
Jewellery stocks such as Gitanjali Gems and PC Jeweller jumped up to 15% on Cabinet's approval to the gold monetisation and sovereign bond schemes.
The Times of India  3 hrs ago  Comment 
The charge into stocks pushed yields on low-risk government bonds higher, with the rise exacerbated by the anticipation of auctions of German and U.S. 10-year debt later in the day.
The Hindu Business Line  3 hrs ago  Comment 
The Cabinet today approved Gold Bond and Gold Monetisation schemes to reduce the metal’s demand in physical form and fish out idle gold lying with households and other entities. “It is sa...
Wall Street Journal  10 hrs ago  Comment 
Some investors accept a lower yield on bonds because they believe the issuing company is “socially responsible.”
New York Times  11 hrs ago  Comment 
The three men, all former Lehman Brothers traders, are charged with making millions in profits by taking advantage of investors in certain mortgage-backed securities.
The Australian  11 hrs ago  Comment 
A New York hedge fund run by a former math whiz has been buying tens of billions of US Treasury debt.  Sep 8  Comment 
WASHINGTON (dpa-AFX) - Treasuries saw notable weakness during trading on Tuesday, offsetting the upward move seen over the two previous sessions. Bond prices came under pressure in early trading and saw further downside as the day progressed. As...


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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