BONDS » Current Rates, News & Information

There is a plethora of investment options for consumers to choose from. Stocks, bonds, CDs, Money Markets, Treasury Bills are all ways people can make their money earn more money. Some of these choices are marketable securities others are Non-Marketable Securities.

What is a Non-Marketable Security?

Non-Marketable Securities are usually US Savings Bonds, and private shares. Individuals cannot sell these types of securities to another investor. To redeem Non-Marketable Securities the shareholder must work directly with the issuer, per the original terms of the investment.

For years investors having been putting their hard earned cash into US Savings Bonds as they are known as a safe and secure way to diversify investment portfolios and are possibly one of the best insured investments. But what makes them so safe? Is it the backing by the FDIC or is it having the strength of Federal government behind them?

Are Bonds FDIC Insured?

How does a bond work?

Institutions like the Federal Government, private companies and local governments, issue bonds as a type of “IOU” to borrow money to fund projects. Investors purchase bonds and in return, are guaranteed by the issuer some type of return rate for their investment.

Once the bond is purchased, the issuing agents take the money to use as they see fit. The investor then holds onto their bond until the maturity date and redeems it when the time has come.  Corporate bonds afford both investors and those seeking funding a grand opportunity to thrive, as investors make a profit from the lending, and the issuer gains spending freedom.

Before investing in municipal bonds, it’s good to first explore the advantages and disadvantages of doing so to make sure you’re making the most informed investment decision. But just what is a municipal bond? To help you out, we will explore various pros and cons of this investment tool so that when you’re ready to invest, you’ll feel better prepared.

Municipal Bond Tax Exemptions

Treasury bonds are considered one of the safest, if not the safest, investments in the world because they’re backed by the full faith of the U.S. government. Investors looking for a guaranteed return, or a “flight from risk,” usually flock to Treasuries because they’re basically default-proof.

However, since U.S. Treasury bonds usually don’t mature until at least 10 years, there are some potential drawbacks that you should consider before going out and investing all your money in them. In some cases, you’re better off just leaving your money in a high-yield savings or CD account.

Treasury bonds, often referred to as T-bonds for short, are a form of debt security issued by the United States Treasury Department. They are issued in denominations of $1,000, provide semi-annual coupon payments and have maturities of at least 10 years.

While treasury bonds interest rates are usually quite low in comparison to higher-risk investments, they remain popular due their safety. In fact, treasury bonds are considered to be one of the safest investments in the world because they’re backed by the U.S. Government and therefore present practically no risk of default.

If you would like to diversify your portfolio by buying corporate bonds but aren’t sure about the investment strategy involved, review the following important points:

What is a Corporate Bond?

Corporate bonds are debt securities issued by corporations in order to raise money and expand business. The bond is basically an IOU from the corporation to investors and they are responsible for paying the loan back, including interest, by the maturity date. Essentially, the corporation is borrowing from corporate bond buyers and rewarding them for their risky investment with a high return.

The Risk of Corporate Bonds

When you have decided buying corporate bonds is for you, there are a few ways to go about it. The following is an outline of the steps you should take to purchase a corporate bond:

Step 1: Research Corporate Bonds

Review the ratings for the corporate bonds you are considering purchasing. The rating will give you an idea of how financially secure the corporation issuing the bond is. The higher the rating, the less risky the investment. Also, you can review corporate bond spreads to compare a bond’s risk and yield against other bonds.

A corporate bond spread is a comparison of corporate bonds with varying yields and degrees of risk. The spread is the difference between a corporate bond yield and that of a risk-free bond.

Corporate Bond Rates Vs. Treasury Bonds Interest Rates

A corporate bond yield is just about the most important number to consider when determining a bond’s potential earnings and weighing it against other investment options.You can use a simple formula to calculate the yield of a bond you currently own. Or, if you are comparing before buying corporate bonds, calculate the yield-to-maturity for its capability of earning more in the future.

The following are what you need to know about a bond in order to ascertain the yield: