MarketWatch  25 min ago  Comment 
It turns out that all-equity portfolios barely outperform a mix of stocks and bonds, says Mark Hulbert.
TechCrunch  1 hr ago  Comment 
 At its core, Zwift is indoor cycling software. But layered on top of its functionality is a community, that in the two years the company has been operating, has grown in both scale and shear strength. At an event at Rapha’s cycling in SF, I...  2 hrs ago  Comment 
WASHINGTON (dpa-AFX) - Treasuries continued to show a lack of direction during trading on Friday before closing roughly flat for the third consecutive session. Bond prices once again spent the day bouncing back and forth across the unchanged...
Reuters  2 hrs ago  Comment 
U.S. municipal market supply will likely be among the highest in a decade when an estimated $16.7 billion of bonds and notes goes up for sale next week, lead by deals from New Jersey and...
Clusterstock  2 hrs ago  Comment 
There will be "big, bad outcomes" if the European Central Bank prematurely reduces its bond-buying program designed to support the economy, according to Bridgewater Associates founder Ray Dalio and his colleagues. Dalio and his colleagues Bob...
MarketWatch  4 hrs ago  Comment 
The reversal in declining interest rates means that so-called bond proxies are in for a rough ride, according to an analyst
Benzinga  6 hrs ago  Comment 
Investors are going long fear and short hope. According to a new report by Citi Research analyst Robert Buckland, money has been pouring out of stocks and into bonds in 2016. Heading into the last few weeks of the year, bond funds have seen...
MarketWatch  7 hrs ago  Comment 
High-yield junk bonds, as measured by the most popular exchange-traded funds tracking the space, have been on a tear this year, and recent gains in the space could mean that equities are due for a rally of their own.
The Hindu Business Line  8 hrs ago  Comment 
Delhi International Airport Private Limited, a subsidiary of GMR Airports Ltd. and GMR Infrastructure Limited, has priced $ 522.6 million in the international bond market. DIAL entered into a Purch...
MarketWatch  8 hrs ago  Comment 
Treasury yields followed Japanese and European rates lower on Friday, with the 10-year yield posting its largest weekly drop in a month.


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