Different Types of Bonds

Investing in bonds is very safe, and the returns are usually very good. There are four basic types of bonds available and they are sold through the Government, through corporations, state and local governments, and foreign governments.

The greatest thing about bonds is that you will get your initial investment back. This makes bonds the perfect investment vehicle for those who are new to investing, or for those who have a low risk tolerance.

The United States Government sells Treasury Bonds through the Treasury Department. You can purchase Treasury Bonds with maturity dates ranging from three months to thirty years.

Treasury bonds include Treasury Notes (T-Notes), Treasury Bills (T-Bills), and Treasury Bonds. All Treasury bonds are backed by the United States Government, and tax is only charged on the interest that the bonds earn.

Corporate bonds are sold through public securities markets. A corporate bond is essentially a company selling its debt. Corporate bonds usually have high interest rates, but they are a bit risky. If the company goes belly-up, the bond is worthless.

State and local Governments also sell bonds. Unlike bonds issued by the federal government, these bonds usually have higher interest rates. This is because State and Local Governments can indeed go bankrupt – unlike the federal government.

State and Local Government bonds are free from income taxes – even on the interest. State and local taxes may also be waived. Tax-free Municipal Bonds are common State and Local Government Bonds.

Purchasing foreign bonds is actually very difficult, and is often done as part of a mutual fund. It is often very risky to invest in foreign countries. The safest type of bond to buy is one that is issued by the US Government.

The interest may be a bit lower, but again, there is little or no risk involved. For best results, when a bond reaches maturity, reinvest it into another bond.

Recent Investment Buzz

Good Advice: Hold off on financial stocks - "Be cautious and wait for clarity. Don't worry about missing the bottom of the market, because right now, there are too many unknowns. Stay away until there's vision. If you're going to invest in the sector, make sure you know what you're investing in. Don't take a flier on something and hope." He says. [Read More...]

WSJ.com - Ten Investments to Watch in 2009 - Here's one financial prediction you can rely on: Whatever happens in world stock markets next year, it won't be as bad -- at least in dollar terms -- as 2008. [Read More...]

Las Vegas investment firm - Comprehensive Financial Services - Life Settlements, Stock Market and Real Estate Investment Options. Located in Las Vegas but can help investors in all 50 states. [Read More...]

Stock Market Terms, All about Stock market - Stock Market Terms - Meaning and Defination, Stock Market Dictionary: Stock Market Terminology & Concepts. Share Trading Glossary, Financial Terms , Investment Terminology in Indian Stock Market Trading, Understanding NSE,BSE, SENSEX, NIFTY. [Read More...]

"DoublingStocks" Review: What Is It and Who's Behind It? - "With more and more people jumping into Investing on their own, the market is flooded with good intentions that often don't turn out for the best. You need a Stocks/Options trading system that can help to demystify the world's financial markets!" [Read More...]

How to Find a Financial Adviser that Fits Your Personality | - Many investors find that they do not have the time or energy needed to be successful in the stock market. Some may turn to investment brokers for guidance, which may or may not be a good thing depending upon your circumstances. Whatever decision you arrive at, the following steps will help you find a financial adviser that fits your personality. [Read More...]