Essay on A Standard Guide in Bond Investments

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A Standard Guide in Bond Investments

Millions of Americans are cautious as to how they invest their money or where they should invest their money; whether it’s to invest in real estate, stocks, and mutual funds; or take a safer approach by choosing a conservative options and invest in bonds. While establishing their financial planning, most American chose to invest in stocks and mutual funds because of the potential in hope of a larger return for their investment. Whereas, conservative bonds such as government and corporate bonds offer lots of potential and investment growth in the long run. Though there are risk and safety associated with many investments, the key is to decide how much risk are involved, and research the quality
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Conservative Investment Options: Bonds
Why invest in Bonds? Corporate and Government Bonds are no substitute for stocks, which in spite of the current predicament in the market are probably still the best investment for the long haul. However, bonds are a good option for the conservative investors. Bonds is a type of security that functions like a loan, relatively in their best form are basically IOU’s- receipts for money borrowed from the investor, they are issued by private companies, municipalities, or government agencies. They bind the issuing organization to a fixed amount on the maturity date, which is set when the instrument is issued (Kiplinger’s Personal Finance, 2003, p.1).
Types of Government Bonds and Debt Securities Bonds usually come in a variety of forms with each having its own individual benefits, risks and tax considerations. Normally most bonds falls into four general categories: corporate, government, government agencies and municipal (Ameriprise, 2008). Meanwhile, government bonds are issued by the U.S. treasury and backed by the full-faith and credit of the U.S. Government where they will repay a specified amount of money, along with interest. • Treasury Bills- (T-bill) is a short-term government security with maturities that are sold at a discount at their face value with a minimum unit of $1,000 and sold
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