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newratings.com  7 hrs ago  Comment 
WASHINGTON (dpa-AFX) - Treasuries moved moderately higher during trading on Tuesday, as traders looked for safe havens amid worries about the global economy. Bond prices moved higher in early trading and remained positive throughout the session....
Clusterstock  8 hrs ago  Comment 
FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors. Jeff Gundlach's DoubleLine Capital has a new fund (Investment News) Bond guru Jeff Gundlach's DoubleLine Capital has...
Insurance Journal  9 hrs ago  Comment 
The U.S. Department of the Treasury has raised The Main Street America Group’s NGM Insurance Company’s single surety bond capacity threshold to $93.4 million. The Jacksonville, Fla.-based super-regional property/casualty insurance carrier’s...
Financial Times  10 hrs ago  Comment 
New deals mark one of busiest days of year for the asset class
Wall Street Journal  10 hrs ago  Comment 
China’s bond-ratings firms downgraded a record number of companies as the stock market tumbled earlier this summer, though trading in the bonds dried up right after the downgrades, limiting their price declines.
MarketWatch  Sep 1  Comment 
Treasury yields extended earlier declines Tuesday as U.S. stocks plummeted and investors moved into the perceived safety of the U.S. sovereign-bond market.
Clusterstock  Sep 1  Comment 
BrewDog — the Scottish craft beer maker that's known for its Punk IPA — just launched two new crowdfunding drives on platform Crowdcube, letting people buy shares and offering a bond. Investors can buy a minimum of two shares for £95 ($145)...
Channel News Asia  Sep 1  Comment 
For those who redeem the SSBs at an earlier date, the average return per year will range from 0.96 per cent at the end of the first year to 2.53 per cent at the end of year nine. Those who hold the bonds for five years will earn an average of 2.01...
Mondo Visione  Sep 1  Comment 
Exchange trading to bring highest transparency and security standards to government bond trading Better fungibility of government bonds to particularly benefit private investors Fixed quotes of market makers improve liquidity and price quality...
Forbes  5 hrs ago  Comment 
Finance Asia  Sep 1  Comment 
Kexim returns with its first baht-denominated bond deal in more than two years and its lowest ever coupon in the currency.




 
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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