RECENT NEWS  2 hrs ago  Comment 
WASHINGTON (dpa-AFX) - After falling sharply over the past several sessions, treasuries regained some ground over the course of the trading day on Thursday. Bond prices moved to the upside in early trading and remained firmly positive throughout...
MarketWatch  2 hrs ago  Comment 
U.S. stocks closed higher on Thursday, recovering some of the losses from the previous two sessions, as turbulence in bond markets in the U.S. and in Europe appeared to subside. The S&P 500 closed 7.85 points, or 0.4%, higher at 2,088.00. The...
Financial Times  2 hrs ago  Comment 
Japan’s bond bear market in 2003 offers clues on what is to come  4 hrs ago  Comment 
  NEW YORK (TheStreet)  -- On Thursday the S&P 500 up close to 1% and climbing to session highs but bond yields are the real story -- 10-year Treasury rates have soared 14.9% over the past five days.  Interest rate volatility is up a...  5 hrs ago  Comment 
NEW YORK (TheStreet) -- The recent selloff in the Treasury bonds has been so unnerving that many investors have been tempted to join the stampede. But don't flee yet. There are, in fact, several ways to profit from the bond turbulence using...  6 hrs ago  Comment 
So much for bonds being safe.  6 hrs ago  Comment 
Volatile day for global share and bond markets but crude price fall prompts partial recovery A dip in the oil price after its recent gains gave a lift to transport groups on hopes of cheaper fuel costs. With oil stocks in Europe rising last...
Wall Street Journal  7 hrs ago  Comment 
A weeklong selloff in European bonds has wiped out much of the price rally sparked by the European Central Bank’s massive stimulus program.
Forbes  7 hrs ago  Comment 
Comparing units outstanding versus one week ago at the coverage universe of ETFs at ETF Channel, the biggest inflow was seen in the Emerging Markets Local Currency Bond ETF (EMLC), which added 6,200,000 units, or a 11.7% increase week over week.
Yahoo  May 7  Comment 
World financial markets were unsettled again on Thursday as a week-long sell-off in benchmark government bonds, stocks and the dollar and a race up in oil prices showed little sign of relenting. Nerves were still jangling in Europe and shares and...  May 7  Comment 


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