5. Investments. Corporate Bonds
Recently in this blog, we’ve been discussing the importance of diversifying your knowledge of investment opportunities beyond just the stock market, such as last weeks article on Convertible Securities. In doing so, you should be able to make more intelligent decisions about where to put your money, no matter what kind of turn the market takes. In today’s times, this is obviously a very useful skill to have.
Discussing Corporate Bonds
Today we’re going to discuss corporate bonds. Odds are, like most people, you’ve dealt with a bank before in the past. Whether it was to get a mortgage to buy a house, or a loan to purchase a car, you borrowed money from them and then had to pay it back over the course of time by a predetermined date, along with a premium called interest. When you purchase a corporate bond, you’re doing the exact same thing with a corporation, only you’re acting as the lender.
Whatever cash value you purchase the bond for, this cash is then distributed to the corporation so that they can put it to use just as you would a loan. In return, they must repay you on a pre-determined date called the date of “maturity”. But of course, you would need a greater incentive than that to loan your money. Just like you pay interest, the corporate you buy a bond from will then pay you interest at periodic intervals until the bond is paid in full.
Good Continuous Income
Corporate bonds aren’t the greatest way to earn a lot of money in a flash, because even when they offer a decent yield, it tends to be spread out over time. However, this very feature does make them a really good source of continuous investment income. Retirees might take note of this and use corporate bonds to their unique advantage.
If you’re interested in buying corporate bonds, this can easily be done at just about any broker in the game, as well as at many banks. Unlike taking out a loan, you’ll want to buy when the interest rates are at their highest, though.
See you next week for part 6 of Investments.
Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2009
Tags: Corporate Bonds, earnings, Investing, market, money, Share Strategies, Stock
