What are bonds and why should you buy them?
Have you ever bought bonds? If yes, then you must have done it with a purpose. Most of the common people who have not bought such kind of instruments do have valid questions? First and foremost is that, why should one buy such bonds? Experts had given a very simple answer to such a question. They keep on emphasizing that, bonds are nothing but instruments for investments.
Are the investments made in a bond too risky?
As far as the investments are concerned, it is important to note that, bond investments are quite risky. Such risky investments are made by investors because of higher returns on investments that could be expected. Moreover, one of the major aspects which differentiate such kind of investments from other kinds of bank based ones are that of market uncertainties. Since the investments related to bonds are subject to market risks, investors are suggested to be extra careful. Return on investments therefore should be carefully studied before the investment is carried out.
How to Buy Bonds: Few ways and methods
Irrespective of the country in which you reside, you are free to buy bonds for investment. As a matter of fact, most of the bonds are bought online. The easiest way to buy bonds is to visit the treasury of the respective country within which you reside. For instance, if you are a citizen of the US, then you can buy bonds through the US Treasury Department. Visiting the online site of the treasury department is recommended, therefore, before you are actually pouring in the investment.
Another important way for buying bonds can be considered through a brokerage. As a matter of fact, if you surf online, you shall see that, most of the online brokerage sites do sell bonds. As per the experts, such bonds available online can be of various types. These include corporate bonds, treasury bonds as well as municipal bonds.
Another best way to buy bonds remains to be through a mutual fund. In addition, sometimes you can buy bonds through exchange-traded fund as well.
What is the minimum amount of investment that you shall require?
In order to buy a particular bond, the investor would require to understand the type of bond being required. The amount to be invested varies from one type of bond to the other. Bonds which are not of high value can be bought for a lesser price obviously. But, there are high-valued bond prices as well. Mortgage backed bonds can be bought for instance at a higher value of USD 25,000 respectively.
What are the ways of making money through bonds?
There are in fact, several ways of investing in bonds. However, the most important aspect is, to get the highest return on investment. One can withhold the bond only to be released after the maturity date. Collecting the interest accrued would be easier at this stage. It is important to note that, interest accrued on bonds invested can be encashed twice in a year.
