The yields of bonds or how to invest money
Investments in bonds are the most reliable among the attachments on the securities market. Investments in bonds are recommended for those who have important capital preservation and income higher than the bank deposit.
Investment holder receives income in the form of interest payments. Typically, bonds are sold at a price that is below naminala, and paying for a nominal price. The difference between the nominal value and the purchase price and is income of the investor.
Investing in bonds is very similar to deposit at the Bank, and, here and there money is invested for a specific period and the percentage defined in advance. From investing in bonds has two advantages. The first advantage is that the yield on corporate bonds issues higher. The second advantage is that you can pick up the money without loss of earned interest.
Investing in bonds is always liquid, meaning they can sell without a loss from prichitajushhih percent in contrast to a bank account. In case of early closure of the bank account you lose interest. Market bonds is considered to be the market that is intended for conservative investors. Price fluctuations in the market for bonds is very small compared to the dynamics of stock quotes, which is undoubtedly very active. For investors, the most important are the interest or coupon payments, but the change in market value of the bonds, too, will undoubtedly affect the income of the investor.
Corporate bonds are more reliable than stocks, and even corporate bonds are more profitable than bank deposits. Corporate bond income is approximately eight-18 percent. This type of bond yield will vary depending on the reliability of bonds. On the market there is a huge amount of bonds, and the investor can choose the perfect combination of risk and return. There are bonds of large and reliable companies with small interest payments, as well as have bonds debited to large companies, but with high interest payments.
Particularly profitable bonds are small companies who are just starting to market the securities of the company. Russian Federation Government bonds do not represent interest for investors because their yield is equal to only eight per cent per annum, and this yield is considered to be low.
Bonds are considered securities. When buying a bond investor becomes a creditor of the company-issuer, so bond is a debt paper. The issuing company agrees to pay the holder of the bonds nominal value bonds at the end of her treatment and stable income as a percentage of the face value of the bond, which previously known or easily predicted.
Bonds are issued by banks and companies from various industries. For example, in 2004 year bonds released about eighty companies and banks. Among these banks and companies were both upscale and not very trusted issuers.
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The investor can sell bonds in any day or wait until the period of bonds circulation. When this date expires, the bonds will be redeemed by the issuer. Bonds circulation term is usually from three years to five. The nominal value of the bonds and the income will be transferred to the investor's account, which he opened with his broker.
Buy bonds, as well as the purchase of shares through the Internet. Basic stock information on issued bonds are available through special terminals and are broadcasted to all bidders. But in order to make a purchase is not necessary to install Terminal bonds and purchases via the Internet. Buy bonds can and your broker, you will only need to give him the order over the phone.
Bonds are considered a safer investment tool, because the bond holder has a number of advantages to claim share of the assets of the company, which provided the investor bonds if its restructure or liquidate. For companies-issuers of bonds is a reliable alternative to banks and other types of credit. Banks and other lenders offer less attractive options than capital markets. The financial terms of such creditors have less attractive. Typically, banks and other creditors have higher interest on the loans.
When investing in bonds, you must pay special attention to a few points that are key. They are maturity, credit quality, early redemption conditions, price, tax status, interest rates, yield.
All these factors together helps an investor to assess the value of the debt, to decide to what extent the investment meets its objectives. Maturity is a predefined date. On that date, the face value of the bonds must be returned to the investor. Maturity is typically from one to thirty years. All the bonds at maturity are divided into three groups.
The first group is the short-term bonds. This group includes all bonds whose maturity of not more than five years. The second group is a medium-term bonds. This group includes all bonds maturity, which is from five to twelve years. The third group is long-term bonds. This group includes all bonds whose maturity from twelve years and more.
Different bonds can have very different credit quality. Credit quality can vary from Treasury bonds to bonds rated below investment grade. Remember that investments in bonds are the most reliable among the attachments on the securities market. Investments in bonds are recommended for those who have important capital preservation and income higher than the bank deposit.