Why Investing in Bonds is Good for You

0
0
0
0
0
0
0
0
0
or copy the link

Investing in bonds can often be a much-maligned venture because bonds have the unenviable reputation of being low-yield, boring investments. As such, many who are new to investments often gravitate towards the actively traded assets like stocks and ETFs and altogether neglect the value that bonds bring to their portfolio. But are bonds really that unworthy of your attention or are they just misunderstood assets that can be good for you in the right circumstances? Find out on the Tumblr for Ori Tal as well.

The prudent answer would be the latter. In a word, bonds are good for your portfolio when utilized properly. The nature of bonds makes them excellent assets used to hedge riskier investments like stocks. In very simple terms, bonds are loans that you lend out to the government or a corporate institution – depending on the nature of the bond – payable after the loan matures and with a corresponding increase determined by the interest rate at the time the bond was secured. Like most loans, the longer maturity of a bond means a higher yield for the investor. See more by Ori Tal 91

Within the broad definition of bonds, one can further characterize the type of bond as we’ve already hinted. Government bonds are those issued by the government. These tend to have lower yields because these tend to be safer owing to the assumption that government bonds “almost always” do not default. On the other end are high-risk corporate bonds issued by corporations that may have a less-than-stellar reputation for paying off its debts. The interest rates in these bonds are higher but so are the risks associated with buying them.

In addition, it is also noteworthy to mention that bonds that you purchase from government institutions are often exempt from paying taxes. This is to encourage investors to lend money to government institutions to help fund their projects. In the US, municipal bonds are a popular form of medium-term small investment for people who want a modest yield while at the same time helping their local governments execute projects and deliver services to the benefit of its residents.

As a final note on investing with bonds, it is important to remember that you need not hold on to the bonds that you purchase until it matures. You always have the option to sell your bonds to other investors provided you can work out the math. This is where the value of the interest rate comes in. If the interest rate rises in a given year, bond prices tend to fall. Conversely, falling interest rates mean that bond prices go up. When you factor in the duration with which you have held the bond and its corresponding maturity, you get an idea of what the expected bond price should be if you choose to sell it today. If you’re not happy with the price, you can simply hold on to it until maturity.

These intricacies make bonds a great way to hedge riskier and more volatile assets. You only need to find the bonds with the most competitive prices so you can maximize your investment both in the short-term and in the long-term.

Comments: 88

  1. Guadalupe January 31, 2013 at 2:42 pm Reply

    I am 15 and that i wishing to obtain a job this summer time making for the most part $2500. What can be the easiest method to make those funds grow for any year until I’m able to obtain a vehicle? Must I purchase the stock exchange, purchase bonds or what? What type of lender must i visit? Bank, or my normal bank? I presently don’t have any savings anywhere.

  2. Cortney February 26, 2013 at 2:26 am Reply

    Susan purchased municipal bonds which yield 7% annually and certificates of deposit which yield 9% annually. If Susan’s initial investments amount to $13,000 and the annual income is $950, how much money is invested in bonds and how much is invested in certificates of deposit?

  3. Jacquelyne March 13, 2013 at 5:53 am Reply

    iam considering investing in some differant directions, one would be in gold and two may be in bonds, so what would be a good way to invest in gold in the stock market, and what bonds would be good to invest, i have allways heard when the economy is in a slump its good to invest in bonds.

  4. Tasia March 15, 2013 at 6:19 am Reply

    invest the money by placing some of the money in stocks and some in bonds. To diversify, you decided that five times the amount in bonds should equal three times the amount invested in stocks. How much should be invested in stocks? How much should be invested in bonds?

  5. Tai March 15, 2013 at 3:37 pm Reply

    I understand that if an individual invests in municipal bonds, they do not have to pay federal income tax on the interest, and usually do not have to pay state income tax on the interest either. But what if a corporation buys municipal bonds, do they have to pay federal income tax on the interest? And do they have to pay state income tax on the interest?

    Thank you advance for your generous help.

  6. Jerica March 22, 2013 at 2:15 pm Reply

    Okay so I know how you make profit in other forms of investing (Real Estate, Bonds, etc.) but how do you actually make money off the stock market, assuming no dividend payouts. Is it like a slot machine and you just cash out or what?

  7. Elisabeth March 31, 2013 at 3:42 am Reply

    I’m thinking about taking out student loans to invest in bonds that will mature before I graduate. Are there any possible problems with this strategy? The loans will not require repayment till 6 months after graduatation, and as it stands, I do not need to take the loans to pay for school.

  8. Latosha March 31, 2013 at 1:44 pm Reply

    If I have a 100 for example and I want to invest in bonds or tresury bonds im not sure which is it or there the same. But how long would it take for me to make money from that 100. When can I withdraw the money? Where do I go to get the money? How much money can I make from that 100? And your experiences or advice would help. How risky is it? Usually do people gain or lose money?

  9. Hellen April 1, 2013 at 2:56 pm Reply

    I would like to start some investing. I have $100 to invest but I do not know where to get started.

    Where are some places I can go to LEARN how to invest wisely. As well as learning the basics.

    If you invest how much were your stocks when you first got them and how much are they know. Dont need to list names if you choose not to.

  10. Enoch April 11, 2013 at 1:25 am Reply

    I’m interested in investing-trade/stocks/bonds. What steps must I take if I wana start investing in stocks/bonds. How do I get started, I know its challenged.
    Tell me how can I get started…schools..whatever available…the best…
    Help me out…

  11. Rhett April 11, 2013 at 10:26 am Reply

    I am making a case assignment for my uni, however there is one ‘tip’ in there that I do not understand. I have to come up with three lending and borrowing scenarios, and it say:

    ‘Make at least one scenario dependent on either not borrowing or not depositing fixed.’

    I already made one with investing in governmental bonds, is that already some sort of depositing fixed?

    English is not my first language that is why it is a bit difficult to understand! Hope someone can help me.

  12. Maxie April 11, 2013 at 10:30 pm Reply

    I’m starting an internship very soon at an investment management company, and I could use a refresher, to say the least. I’m looking for a concise book that explains the basics of investing (stocks, bonds, mutual funds, options, etc) so I don’t sound like an idiot when I show up to work. Preferably a book available in ebook form. I suppose a sufficiently detailed web article would work as well. Thanks, from my boss as well haha.

  13. Constance April 13, 2013 at 8:14 am Reply

    I have street business knowledge, but no hardcore economics knowledge. If the people invest in bonds that are issued by the U.S government will it help us out of the biggest deficit in history?

  14. Joelle April 28, 2013 at 1:35 am Reply

    I am looking to invest in government bonds as an alternative to putting my money in a bank which offers a very limited amount of protection ($250,000 FDIC insurance limit). Which bonds are the best to invest in? Which bonds give the best returns and the most amount of protection? For instance, if I place $5,000,000 in government bonds, will my money be protected until the bond reaches maturity? I also was told that the money will be tax free if it is placed in government bonds, is this true? Any help from anyone would be greatly appreciated.

    Thanks.

  15. Johana May 20, 2013 at 2:31 pm Reply

    For example, if I used a cash advance to
    1. buy stocks,
    2. invest in bonds/fixed income assets
    3. “refi” my personal mortgage
    4. buy investment property

    or any other situations where credit card interest is tax deductible?
    Thanks for all you responses. Just to clarify –

    Say I borrow $100 from my credit card at 10%.
    I owe $110 at the end of the year.

    I put this same $100 into a stock (or some other investment). It goes to $120 and I sell, gaining $20.

    1. Do I have to pay taxes on $20, or $10 ($20 gain minus $10 interest)?

    2. If I didn’t sell, can I deduct the $10 interest against my other income?

  16. Kam May 27, 2013 at 2:38 am Reply

    I’m considering investing in bonds, issued as subordinated debt by a company. While I doubt that the company will ever go bust, is it possible for it to choose not to pay the interest on a bond, as opposed to simply defaulting?

  17. Allen May 27, 2013 at 6:39 am Reply

    can the interest rate of the bond changes before its maturity date? are issuers allow to do that? when you invest in bonds, does that mean you are almost guarantee to get your money back, unless that company goes bankrupt?

  18. Rodrick May 27, 2013 at 6:45 am Reply

    I know that now is a bad time to invest in bonds generally because interest rates are so low, and because a rise in rates (which seems imminent) will make low-interest bonds even less valuable.

    But does that same principle apply to well-managed bond FUNDS? E.g., if I invest in mutual funds that specialize in bonds, and if interest rates increase, will the same phenomenon apply?

  19. Tommy May 29, 2013 at 5:40 am Reply

    Hi,
    I want to start investing in bond market, however, I am new to this market with basic knowledge of bond valuation. After I read the Fees and Commission from most popular brokers, I can see they are charging mark-up and down fee for bond trading. Anyone know how much % they are actually charging ?

  20. Shelley June 4, 2013 at 8:18 pm Reply

    My kids have well meaning grandparents who send savings bonds for birthdays and holidays and I have no idea what to do with them. I have thought about putting them in a mutual fund at some point. Does anyone know what amount of money you have to have to start one up?

  21. Casey June 5, 2013 at 2:56 am Reply

    Susan purchased municipal bonds yielding 10% annually and certificates of deposit yielding 13% annually. If Susan’s investments amounted to $12,868 and the annual income is $1604.23. how much money is invested in bonds and how much money is invested in certificates of deposit?

  22. Mack July 3, 2013 at 7:17 pm Reply

    Interested in investing in bonds want more than surface data to the details on the bond. Where can I find the true details of a bond?
    Is there anywhere on the Internet to check the prospectus?

  23. Brittaney July 5, 2013 at 4:40 pm Reply

    Over the last few years, investors have been forced to look for ways to squeeze additional income from their investment portfolios. Do you think investing in corporate bonds is a good, or the best, way to increase income? Why or why not?

  24. Lance July 5, 2013 at 4:40 pm Reply

    Susan purchased some municipal bonds yielding 7% annually and some certificates of deposit yielding 9% annually. If Susan’s investment amounts to $19,000 and the annual interest is $1590, how much money is invested in bonds and how much in certificates of deposit?

  25. Nikia July 29, 2013 at 12:14 pm Reply

    What do you think is the best place for online investing, stocks, bonds, trading, selling etc…
    via web based ?

  26. Duncan September 12, 2013 at 10:19 pm Reply

    I’m in my second year of college and would like to start investing in stocks, bonds, CD’s, mutual funds etc.. But I don’t really know where I should start? I have about $7,000~ that I would like to invest. What would be the best route for someone like me who has very little knowledge in investing?

    I generally have around $600 each month after my living expenses, that I could also put towards investing. I just don’t know where to begin.

  27. Camilla September 19, 2013 at 4:56 am Reply

    I am looking for reputable guides and books on investing. I am starting to have a bit more cash these days and I have people I know who have been doing very well in the stock market. I know nothing of these and would really like to learn how to trade stocks, invest, bonds, derivatives, etc. I was looking at books on Amazon but there are so many and I want to books that take into account what has happened during the recession and such for good measure. Any suggestions?

  28. Garry October 13, 2013 at 7:09 pm Reply

    How does a government bond differ from a cd?

  29. Ted October 17, 2013 at 2:22 pm Reply

    On average, using investing, CDs, bonds, whatever.

  30. Ray October 27, 2013 at 8:19 pm Reply

    I know small time deposits are considered a part of M2, but does that include a $2000 government bond that matures in a few years?

  31. Tristan January 26, 2014 at 1:44 pm Reply

    Also does anyone have any info about investing in bonds and all of that? Which bank is the best for that?

    Thanks!

  32. Terrence February 1, 2014 at 11:22 pm Reply

    A couple wants to invest up to $60000. They can purchase a type A bond yielding 8.25% return and a type B bond yielding a 12.75% return on the amount invested. They also want to invest at least as much in the type A bond as in the type B bond. They will also invest at least $30000 in type A and no more than $40000 in type B bond.
    How much should they invest in each type of bond to maximize their return?

    (I have answered all of the questions i need to except this one, i have no clue. Any help would be greatly appreciated!)
    Thank you soooooo much!!!

  33. Oswaldo February 2, 2014 at 12:04 am Reply

    If so, are there restrictions imposed due to the fact that the buyer is not a citizen of the UK?

  34. Yessenia February 18, 2014 at 9:37 am Reply

    I really dont understand the whole concept behind bonds and stuff like that but all of a sudden i feel the urge to invest some money, i was told that it can be a good way to make some cash. However, i have no idea how bonds work.I found this bond in this upcoming real estate and developers. It states that:
    the company will issue 44,444,444 shares at a price of €0.45 per share with an over-allotment option of up to a further 22,222,222 shares. Concurrently, existing shareholders of the company will be subscribing to a further 22,222,222 shares also at a price of €0.45 per share.

    The issue price is of 0.45euros and the nominal value is of 0.20euros

    The following was also stated:
    Minimum Application for shares
    Pre-placement: 25,000 shares (equivalent to €11,250) and in multiples of €100 thereafter
    Preferred Applicants: 2,000 shares (equivalent to €900) and in multiples of €100 thereafter
    General Offer: 2,000 shares (equivalent to €900) and in multiples of €100 thereafter.

    Now my questions are the following: what is the minimum amount that i can invest in this bond? And do you guys think it is a good bond too invest in?

    Thanks for your help and understanding 🙂 Have a nice day xx
    @ John W – haha, yeah, i never said i was a genius at the subject, thats why i came and asked the question in the first place! But i appriciate that you still answered 🙂

  35. Ermelinda February 21, 2014 at 2:58 am Reply

    People have told me it would be smart to invest some of my money. What type of investments should I make? What’s the difference between stocks and bonds? I’m also thinking about investing in a mutual fund. Are those good? What about gold? It’s pretty expensive now, should I wait until it goes down? I pretty excited about this whole thing! Hopefully my investments will pay off so I can pay my kids college tuition when they get older. I’ve been reading all about investing, and watching CNBC and Bloomberg, but it’s all just so confusing! I just need some advice in terms I can understand. And one more thing, I don’t want to invest in any companies run Jews. Those greedy goddam Jews already have enough money as it is.

  36. Thuy February 21, 2014 at 2:59 am Reply

    My mother asked me for my help in investing her money, since I am in business school. However, I am only an accounting major, so a vast understanding of the market is something I do not possess, much less care for. She is approximately 50 yrs old, and just separated from her husband. She has asked me to help her set up an investment, in which she can just live off of the money she can make, and I automatically assumed bonds. I know bonds have a minimal ROI, but she does not need thousands of dollars a month to live, only the necessities (house, taxes, bills, etc. are all prepaid and taken care of), she only needs “leisure” money and grocery money, stuff like that. I have thought about investing in municipal bonds, mainly because they are tax free, and while they do have a low interest rate, they are of the safest investments, and we are not looking to “hit it big”. However, I was also thinking about diversifying, also looking into high-risk, high-yield bonds. I figured that this way, we have the municipal money as a safety net, and this money could serve as an extra source of high income (it is also for me to “play” around with a bit). So my question is, does this sound like a god idea, or is there somewhere that I can get more information on bonds and do this right?

  37. Valentin February 21, 2014 at 6:46 am Reply

    You would like to invest $10,000 in bonds for the next five years. You could

    1. Purchase a bond with a 5-year maturity.
    2. Purchase a sequence of short-maturity maturity bonds, reinvesting at the maturity
    of each one. For example, you could purchase 1-year bonds each year for the
    next five years.
    What are the risks associated with (1) vs (2)? You may use example scenarios to explain
    your answer.

  38. Luis February 21, 2014 at 6:55 am Reply

    AND what are risks of investing?

  39. Vance February 21, 2014 at 6:55 am Reply

    I want to have a steady source of income from investing but (a) I don’t want to spend time figuring what stock to buy and (b) I don’t want to risk my money. A friend suggested government bonds because regardless of the market fluctuations, the government pays the interest. Is this a good advice? If so how should I start? I’m 25 if that helps any.

    PS. I don’t want to become rich but let’s say I want to make $3000 a year from my investment.

  40. Candie February 21, 2014 at 6:55 am Reply

    I want to invest in coupon bonds, so I have income from them – but my friend in San Jose, CA told me the town of Half Moon Bay has gone bankrupt, and no longer have a police force (Half Moon Bay is – or used to be – a seaside town for the idle rich). I looked it up on Wikipedia, and found this:

    “Due to the financial setbacks from a large legal settlement and a poor economy, Half Moon Bay is currently considering major cuts to city services and possibly dis-incorporating.[7] Under a dis-incorporation plan, Half Moon Bay would revert to an unincorporated area within San Mateo County. Tax revenues would flow to the county, which would remain responsible for police and road maintenance. Current Half Moon Bay residents would remain responsible for the bond payments resulting from the legal settlement, which would be added as a lien on their properties.” – Wikipedia, updated April 8, 2011.

    That doesn’t sound as bad, but our US Government nearly shut down last Friday! If it had, I don’t know how long that would have lasted. I’m wondering if investing in US bonds is still a good idea? Should I go oversees? Should I just forget about saving altogether? What should I do?

  41. Thomasena February 21, 2014 at 7:49 am Reply

    A couple wants to invest up to $60000. They can purchase a type A bond yielding 8.25% return and a type B bond yielding a 12.75% return on the amount invested. They also want to invest at least as much in the type A bond as in the type B bond. They will also invest at least $30000 in type A and no more than $40000 in type B bond.
    How much should they invest in each type of bond to maximize their return?

    (I have answered all of the questions i need to except this one, i have no clue. Any help would be greatly appreciated!)

  42. Charlyn February 21, 2014 at 9:44 am Reply

    risky to invest in bonds?

  43. Lee February 21, 2014 at 9:44 am Reply

    What can an investor do to reduce the risks?

  44. Janelle February 21, 2014 at 1:59 pm Reply

    what does it mean when the price of bonds go up on a country? I only have a vague idea…

    http://www.bloomberg.com/apps/quote?ticker=GBTPGR2:IND (for instance)

  45. Alessandra February 21, 2014 at 2:07 pm Reply

    Why should I invest in Bonds along with investing in Stocks? When should I invest in Bonds?

    Thanks-

  46. Spencer February 21, 2014 at 2:08 pm Reply

    Right now I have a mix of various Stock funds.

    What I do not have is any Bonds right now.

    The question I have is if I feel that we are headed into Inflationary times And I think interest rates are headed up, is this the time to move some $$$ into bonds?

    I know that bonds decrease in value as yields go up. I also know that the Fed could fight inflation by raising interest rates.

    If I buy into funds now, would I expect the share values to DECREASE if interest rates rise?

    Thanks for your opinions.
    I may retire at 55 in 5.5 years but not begin to draw from the 401 for at least 10 years (59.5 rule)

    The bond funds I can invest in are:
    – FIDELITY U.S. BOND INDEX FUND (FBIDX)
    – LOOMIS SAYLES BOND FUND
    (LSBDX)

  47. Galen February 21, 2014 at 2:42 pm Reply

    I’m considering investing $10,000 in an intermediate term Bond Mutual Fund. I’ve never invested in Bond Funds before. Is this a good time to invest in bond funds? Why or why not?

    thank you.

  48. Jestine February 21, 2014 at 7:43 pm Reply

    I was at the park and overheard a conversation from this man in his 50’s talking about investing, “I will put $10,000 and in 5 years that will become $11,500.” That person is going to make $25 a month! What’s happening to this world?

  49. Eloisa February 21, 2014 at 7:43 pm Reply

    Pensioner has Shares in a bank that is falling on the market, would like to cash in shares and buy short term Bonds with good interest. Would overseas Bonds give better interest and how do you go about looking for these markets, please

  50. Lorna February 21, 2014 at 9:11 pm Reply

    I have an IRA account invested in a bank, How can I use that to invest in other things such as stock trading or mutual funds. And I need to know more about what Mutual Funds are.

  51. Leesa February 21, 2014 at 9:11 pm Reply

    Hi my uncle has me reading “Rich Dad Poor Dad” and its a very good book so far and now i want to start investing and i was thinking about doing either the stock market,bonds or real estate. Do you think these are good choices and if so how do I go about doing this the smart and right way??
    the only credit debt i have is capital one which is $900 and im going to pay that and I have about $2000 to start of with

  52. Lance February 22, 2014 at 2:49 am Reply

    Hi All,

    I am an IT professional, I have already done tax saving under 80 C upto the limit, now want to save my tax as much as possible + invest my money also. Got to know from my HR that I can save upto 20K in infrastructure bonds, So please suggest me regarding the same is there any risk factor involved with bonds, if yes please discuss the same as well.Is there any other section where I can save my tax as well can do investemnt.

    Please tell me invetsment option as well in case there is no Tax saving.

    Thanks
    Sachin

  53. Alex February 22, 2014 at 2:49 am Reply

    I’m a student and want to make some money for college expenses. I have a mere 1k. Should I invest it in mutual funds, high-rate CDs, safe bonds, or gamble it in the stock market?

  54. Eilene February 22, 2014 at 3:12 am Reply

    Do they have a website? Or can I go to the court house? The post office?

    Where can I go to buy US government bonds?

  55. Edelmira February 22, 2014 at 3:14 am Reply

    Hey i am a college graduate and i am trying to get into investing but i am a bit confused on how it actually works. If i were to get a bond how long will i have to leave it in the bank to get a good amount of money on top of it. I also wanted to know how does stocks work? where can i buy a stock and how much would one cost? If you can please be detailed as possible on your answers because i really need some advice thanks.

  56. Adolfo February 22, 2014 at 3:15 am Reply

    i live in the GTA. im 19 and i want to take a class on investing, stocks,bonds….
    i looked in the cities parks and rec book but they only offer classes on physical acitivites! where do i go?

  57. Dave February 22, 2014 at 4:03 am Reply

    I get a series ee bond from my grandparents every birthday so i got 14 100 dollar bonds ands and like 10 50 dollar bonds just purchased by my dad every now and again. question is i have been working and was wondering if it would be worth investing in a few extra so when im in my 40’s or something i got a few extra dollars. when i get paid 75% goes in my car savings envolope 10% in another for cash i may need to buy usefull things and 5% in an envolope for spending well i got a ton in the blowing envolope so i was thinking about spending it on bonds should i?

  58. Raymonde February 22, 2014 at 4:41 am Reply

    anyone?

  59. Lucia February 22, 2014 at 4:41 am Reply

    Hey everyone, I was wondering if someone could give me a briefing on the fundamentals of government bonds. how do they work? what do you get from them? I’m thinking about getting into them. Please elaborate as much as possible, I know almost nothing, help me out please!

  60. Giuseppe February 22, 2014 at 4:41 am Reply

    With the current situations in place do you guys think it is a good time to invest in municipal bonds? Why or why not?

    thanks
    sorry I mean treasury bonds.

  61. Denis February 22, 2014 at 7:30 am Reply

    I read everywhere that as interest rates rise, bonds become less valuable. However, I can’t find anywhere that explains why this is the case. Can someone explain this to me? Are bonds devalued as interest rates rise only because there will be a corresponding rise in inflation? Or am I missing something? A related question: I’ve read that Treasury Inflation Protected Securities (TIPS) are tied to inflation. Does this mean that they will essentially never lose value unless deflation occurs? Final question: how would you recommend investing $10,000 today, if you have a medium-high tolerance for risk, and have an investment duration of 3 years? Thank you for your advice/help!

  62. Brigette February 22, 2014 at 7:31 am Reply

    Hi,

    I was visiting Bloomberg.com the other day and saw the Brazil’s Government Bonds and currently their 1 year bonds have a yield of 10.91%.

    Almost sounds too good to be true. I imagine buying a Brazilian Bond with US dollars the yield would be much less than that.

    Though i would like to understand this more. Can a Brazilian Bond, whether it be 1,3, 5 etc years, be an attractive investment right now?

    Or should i just buy US bonds? I need to put my saved money somewhere to appreciate.

    Thank you.

  63. Cortney February 22, 2014 at 7:41 am Reply

    Every birthday i get a 100 dollar bond series EE from my grandparents, Im 14 and work and im saving for a car. along with the car i keep about 10% of each check for spending and fun money the rest goes towards the car, I got just about everything i could possibly want and now im just letting it pile up but i was wondering if bonds would be a smart thing so i have some cash years from now. what do you think should i buy a few and save them or just save the cash?

  64. Horace February 22, 2014 at 7:41 am Reply

    Need a little info on government bonds
    How exactly do interest rates determine bond prices?

    I am reading an “Economics for Dummies” book, and it mentions that when interest rates go up bond prices go down. I am not quite sure what exactly the meaning of price is in that context. I thought bonds are sold at a set price. For example, when you buy a $100 bond it will cost $100, but you gain some interest off of that.

    Can someone please shed some light on this. Thanks.

  65. Dorthea February 22, 2014 at 8:08 am Reply

    When you invest in bonds how long does it usually take for the bond to mature? And what determines the intrest rates to increase and decrease?

  66. Apryl February 24, 2014 at 7:04 am Reply

    I just opened a Fidelity multi bond fund: Stratigic income fund. I know you can’t time the market. However, is it best to purchase more shares when stocks are UP for the day? ( buy low)

  67. Edmundo February 28, 2014 at 7:18 am Reply

    I’m a 16 year old seeking to create a portfolio for myself. I’m not too sure about the topic. How much money worth of bonds should I buy to begin with to be “effective”? I’m looking at tapping the money at around 25-26. Also…are there any types of stocks which I could involve myself in to diversify my portfolio?

  68. Lucia February 28, 2014 at 10:25 am Reply

    I really want to get into investing soon and i don’t know the first thing on how to do it.

  69. Stewart March 7, 2014 at 1:52 am Reply

    As an individual investor I have been investing the percentage of my portfolio dedicated to bonds in either bond ETF’s or mutual funds, but I’m concerned this may not produce the price stability and income that it’s meant to produce. Here is why: When you invest in individual bonds, if you hold the bond to maturity you are guaranteed to get the principle back and the agreed upon interest rate. However if I buy a bond fund my principle is not safe and the price will drop in a rising interest rate environment no matter how long I hold on to the shares. Also the interest rate will fluctuate. So I lose the balancing aspect of bonds as diversification to stocks because the price of both will drop with an interest rate increase. So my question is: Is this difference between individual bonds and bond mutual funds significant enough to warrant my attention? and how can an individual investor buy single bonds without paying huge premiums?

  70. Shawn March 7, 2014 at 1:53 am Reply

    whenever i google ‘how to start investing’, what usually comes out are kinda trivial information such tips and suggestions and basic lectures about what are stocks, mutual funds and bonds. these, i know are helpful of course, but what i’m looking for is are specific steps to start investing.. some information that I’m looking for are
    where do i go to start investing?
    who do i talk to?
    how do i get a broker?
    is there an age limit to be an investor?
    where do i go to for these information?

  71. Rogelio March 7, 2014 at 1:55 am Reply

    Do you know where I can more information about investing in corporate bonds? I heard there was a new york bond exchange, but yahoo and google did not provide many results.

  72. Noel March 8, 2014 at 1:23 am Reply

    what do u think of the singapore bonds market?

  73. Lanny March 11, 2014 at 9:07 am Reply

    Im tring to see which one of these four should i invest in. if you can give me the best one to invest in and also some of the characteristcis of each one and tell me what one you think is the best.

  74. Jared March 11, 2014 at 9:16 pm Reply

    im currently 18 and wondering should i invest in some bonds or wait until im older?

  75. Viki March 11, 2014 at 9:17 pm Reply

    us gives bonds to feds. feds give money to government…i don’t get it, what are the bonds?

  76. Bud March 11, 2014 at 9:18 pm Reply

    I am not really interested in an etf bond fund or something like that. Let’s say I wanted to buy a 10 year bond in company XYZ. How do I go about researching rates and actually buying those bonds?

  77. Coy March 11, 2014 at 9:18 pm Reply

    I’m looking into buy governments bonds with sound currencies like Canada and Australia. I’ve heard there is talk of a bond bubble but I think this is mainly in the US? What about other sovereign bonds?

  78. Emerita March 11, 2014 at 9:18 pm Reply

    For those who have retirement accounts and can’t get out of the market including myself, I still have money in bond funds, and zero in stock funds, and about 60% in money market fund where it’s earning 0 % interest.

    I think I would still put more money into bond funds up to 50% of my asset while keeping an eye on what federal reserve will do with interest rates…..

    No one knows when the interest rates will go up, and Japan has kept their rates low for 2 decades after their real estate market bubble…. Who know if US won’t be forced to do the same????

    What is your take on investing in bond funds?
    I am 40 in age.

  79. Arianne March 11, 2014 at 9:18 pm Reply

    So according to various sources, the economy is expected to get pretty bad in the next few months through at least Q2 2012 if not longer. The current semiannual rate for I bonds is pretty attractive, but a downward economic turn would result in a 0% return for a certain period. EE bonds have horrible interest rates, but if I were to buy one, I would definitely hold onto it for 20 years so it can double. Which one is a better buy? I’m getting next to nothing from my bank, but if interest rates and CDs go up to 7-10% in a decade, I might regret investing in an EE bond.

  80. Karleen March 11, 2014 at 9:18 pm Reply

    its types,its merit and demerit…and any sample of government bonds…..????

  81. Ruth March 16, 2014 at 7:13 am Reply

    I can understand that the government can sell bonds if it needs money very quickly. However, in normal operation, apparently they sell bonds to ‘pay off debt’? After selling the bonds and doing whatever with the money, a few years later they have to pay it back, plus interest. How does that help pay off the debt or make money at all? It seems that it is just giving away free money from the government to the bond buyers. So, why do they keep doing it? Is the government just ‘procrastinating’ and leaving it for the ‘future government’ to deal with, are they just plain insane, or is there some sort of subtle technique they are using here to actually make money out of bonds?

  82. Nicolasa March 20, 2014 at 6:39 am Reply

    hi
    i m interested in investing in bond funds or bonds.i did not understand how bonds pay the money or dividends.i m a low risk taker all my investments r in bank cds.now i m thinking of going for bonds.i m a long term investor say like more than 10 years .pl help.thanks

  83. Wyatt March 21, 2014 at 2:22 pm Reply

    From my understanding, when the US government needs money it borrows it from the private Federal Reserve. Let’s say the government needs $1 Billion dollars. So the US treasury then prints $1 Billion worth of treasury bonds and gives it to the Federal Reserve which in return exchanges it for $1 Billion worth of Federal Reserve notes which is also printed. In the end the US government then has to repay the Federal Reserve back with interest. My question is simple, why do we need the Federal Reserve at all? Instead of using “Federal Reserve Notes” that’s printed by a private entity, why don’t we instead just use “Treasury Bonds” which is directly printed by the government instead? By doing it this way, we would not need the private Federal Reserve and the government would not have to pay massive amounts of interest whenever it needs money. Just think of all the interest the US government has had to pay the the FED since 1913! What a waste. All that tax money taken from the people and just going in the pockets of bankers.

  84. Vern March 26, 2014 at 4:46 am Reply

    I am 20 yr old male attending college for accounting. I pay my way through college and have about $5000 in a savings account. However, i want to take some money out of my account and invest it in something. I was thinking about putting it into a IRA or a CD? What about stocks, bonds, or mutual funds at my age? I am confused on how i should start right now. Is it too young for me to even think about investing? I want to start off young so when i am older i have money saved up already. Any advice or opinions would be greatly appreciated. Thanks

  85. Soraya April 3, 2014 at 8:13 pm Reply

    Italys bond yields are currently high. I think this is because they are considered risky as governemtn is in trouble (they might default?), Therefore not many people want them, the price goes down and so the yield goes up… is all this right?

    Am I also right in saying that when the economy is going well, during a boom or something, then the bond yields go up as well? because if they were low then other investments might be more attractive.?

    If that is the case Im confued how bond yields would be high in bad and good conditions.

    Any help would be great!

    Thanks

  86. Morgan April 15, 2014 at 3:53 am Reply

    and who earns interest on them? is it an asset or liability account? :S

  87. Raymond April 20, 2014 at 2:32 am Reply

    Looking to also invest some money with a max term of 2 yrs, but I am looking for it to be pretty safe. Any input on what type of bonds, or should i look somewhere else?

    thanks

  88. Nickolas June 8, 2014 at 5:27 am Reply

    How exactly does the bond market work? If bonds prices are low, should you buy? Are prices low/high now, and would now be a good time to buy? I’m thinking of purchasing a mutual fund which heavily invests in TIPS; would this be a good idea now or not? Please let me know what you think!

Leave a Reply

Your email address will not be published. Required fields are marked *