When it comes to the holy trinity of investing,
(stocks, bonds and cash) it seems the rules and nuances of investing in
the bond market often are the most baffling for newcomers.
For this edition of Investing 101 we are going to demystify the bond market and have put together five quick tips to help you get your head around buying bonds.1. What is a Bond?
Simply put, a bond is a loan. Just like a mortgage, bonds involve a lender and a borrower, and also come with a predetermined interest rate and maturity date that never changes. And just like you and me, bond issuers also have credit scores (or ratings) that make it more or less expensive for them to borrow depending on the likelihood that the lender will be paid back. Bonds typically are sold in $1,000 increments and have a face value (or par value) in the same amount. (more)
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