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A Guide To Various Types Of Bonds
Bonds are loans issued by the government or companies. If you buy a bond, then you are providing a loan to whoever issued it. A bond usually has a fixed rate of interest, and the sum which you''ve paid into the bond will usually be paid back to you at the end of the term. This article introduces you to bonds. Corporate Bonds - Corporate bonds are debt that companies issue which they can then invest in their business. Their value is aimed to be returned to the investor after the maturity date. Interest on corporate bonds is normally paid annually. As corporate bonds can be traded on a stock exchange, their value can rise as well as fall. If you would like to invest in corporate bonds, or if you''d like to know more, then take a look at Legal and General. Gilts (Government Bonds) - The government issues government bonds or gilts. They pay a fixed rate of interest twice annually, and because the government is unlikely to go bust, they are considered very safe investments. Although they are very safe, you are not guaranteed to get all of your investment back. Like corporate bonds, gilts can be traded on a stock exchange, so they''re price goes up or down. You can buy gilts through a broker, high street banks or through the government at the Debt Management Office. Bond Funds - A bond fund invests in a diversified portfolio of bonds (usually with both corporate and gilts) which will often have various interest rates and dates for maturing. Because the fund is diverse range of investments, it lowers the risk to your capital. Because of the mix of investments, bond funds can''t promise a fixed return; instead they aim for a ''target return.'' However, they are useful investment products to use alongside a diversified stock portfolio for long-term investors. Article Directory: http://www.articledashboard.com Renato Loehrer is very knowledgeable on savings and accounts and loves to write about corporate bonds. |
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