BONDS » Current Rates, News & Information

If a corporation needs to raise money, it has the option of issuing a corporate bond. When you purchase a corporate bond, you are essentially granting that corporation a loan and it is backed only by their individual assets. In turn, you will be rewarded for your risky investment with a high interest rate.

Interest rates are not the only determining factor in how valuable a corporate bond may be, however. Review the following to better understand how corporate bond rates play into the overall value of a corporate bond:

Ryan Guina is an entrepreneur and writer. He has worked for Fortune 500 companies and served six years in the USAF. He writes about money management and small business topics at Cash Money Life and military money topics at The Military Wallet. You can follow his twitter feed.

Buying gifts for children is fun. It’s even more fun to watch their face light up when they open the toy and spend the next several hours running around the room with their newly found treasure. Sometimes money is actually a better gift for children than toys, clothes, or other items, though.

Nothing makes Grandma and Grandpa less popular than when they top last year’s ugly sweater present with an untouchable investment for your fourteenth birthday: the dreaded savings bond.

As of 2006, according to CNN, the U.S. Department of the Treasury is sitting on approximately $13 billion in savings bonds that have not been redeemed, yet no longer earn interest because they have already reached maturity. Savings bonds, which are not subject to state tax, can earn interest for 30 years.

According to a recent report from Fortune Magazine, it seems that government bonds are in such bad shape that even bond managers are questioning the logic in buying them right now. The report explained that prices for government bonds are sliding as economic recovery takes hold and feds struggle with funding a huge budget deficit.

Investors Advised to Brace for Bond Market Hit

Recent reports show that yields for California high-yield bonds may increase to as much as 6 percent by the middle of 2010. Despite this yield increase (which represents higher potential returns), those making investments are not convinced that they should buy in because of California’s poor economic state.

The investment market was plummeted in 2008 and toward the end of the year the Congressional Budget Office (CBO) estimated that U.S. retirement plans alone had lost as much as $2 trillion. This doesn’t include the many other ways to invest where losses scaled upward toward $6.9 trillion by early 2009.

With so much money lost, many people decided to cut back on investing to avoid losing more money.

Those who work hard for their money want their money to work just as hard for them. If you are ready to take the plunge and build up your investment portfolio, investing during a recession can prove to be a valuable strategy for you. According to the number-crunching conducted by Morningstar analyst Bill Bergman, historical data from the last nine recessions proved that investing normally during a recession was better than traditional investment strategies.

Value Stocks

Bonds are debt securities distributed by authorized issuers (business or government entities) that represent a debt owed by that issuer. Similar to a loan, a bond represents a formal contract between the issuer (debtor) and holder (lender), where which the holder gives money to the business to hold. After time has lapsed (i.e. the bond has matured), the issuer is obliged to pay interest (the coupon) and/or repay the principal. This occurs in fixed intervals over a period of time.

Bonds and often associated with stocks because they are both securities; however, there are a couple of major differences between the two. While bonds offer holders a creditor stake because they are lenders for the company, stockholders have an equity stake, meaning they are owners. Another difference is that bonds are based on a defined term (maturity) because since they are simply borrowing external funds to them to finance long-term investments. On the other hand, stocks are usually held indefinitely since the holder has a more permanent relationship as owner.

If investing in a bond interests you then you may want to consider learning more about municipal bonds, which are government-issued debt securities. Also known as “munis” these investment tools are often attractive to investors because they are typically risk-free – at least in comparison to other forms of investment.

Defining Municipal Bonds

Municipal bonds are popular debt security investment tools issued by the government. While there are other forms of investment issued through the same source, “munis” offer some specific perks that you may enjoy. To find out if you will, let’s explore the basics of municipal bonds.

What Are Municipal Bonds?