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Archive for the ‘Bonds’ Category

Ok – today we are going to talk about what debentures are as well as how risky investing in debentures is. Some people have asked me about debentures and sorry I did not have time to discuss it at the time so I’m making this a post on our Blog.

What are debentures?

Debentures are the most common type of corporate bonds. Debentures are corporate bonds that are backed by the credit of the issuer rather than by any particular assets. Without a real asset to back the bond, debentures sound rather risky, right?

Are debentures riskier than other types of bonds?

Well, generally debentures are not really risky. Compared to other bonds, debentures of reliable issuers have much better ratings than many asset backed bonds. Besides, big corporations do not want their credit ratings to go down by issuing bad debentures. If you want more information on corporate bonds, this little website www.corporate-bonds.info has valuable information.

Any thoughts anyone?

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Today we are going to discuss a type of bonds called the zero coupon bonds. You may have seen zero coupon bonds around even though you may not know what they are called. Zero coupon bonds are sometimes called zeros or zero bonds.

What are zero coupon bonds?

Zero coupon bonds are, like its name, a type of bonds that do not pay interest while the bonds are maturing. Zero coupon refers to no interest, unlike other types of bonds that pay regular interests. In fact, the reason most people like bonds is because of the regular interest payments. So, why would anyone invest in a zero coupon bond?

Zero coupon bonds explained

Well zero coupon bonds do have their advantages. Their interests accrue or built up. Many people buy zero coupon bonds because they are usually sold at a deep discount so when the bond matures, the accrued interest plus the original investment add up to be worthwhile. You can read more about zero coupon bonds at http://www.corporate-bonds.info and also http://all-about-bonds.info.

We have been getting so many bond questions nowadays. As more people shy away from the stock market, more are heading towards investing in bonds. One question that was asked was about income bonds. Does anyone know what an income bond is?

What are income bonds?

Income bonds are also sometimes called adjustment bonds. Income bonds are used when a company is reorganizing and coming out of bankruptcy. Does that scare away anyone? It should not if you know and have research income bonds properly. Income bonds pay interest only if the corporation has enough income to meet the interest payment and the board of directors declares a payment.

With that in mind, if you are looking for regular, guaranteed income then income bonds may not be suitable, unlike its name – income bonds do not really mean income for you from the bonds. Also, do you know that income bonds are a type of corporate bonds because they are issued by corporations? We will be discussing corporate bonds in more detail later. For now, if you want to read more about corporate bonds, there is a site called www.corporate-bonds.info that you can read more about corporate bonds on.

Today we are going to discuss what bonds are. Let’s start with the basics. Some of you may know bonds as fixed income securities or debt securities because bonds have fixed interest payments.

So, what is a bond?

A bond is another type of investment that you can put your money in (just as you would with stocks). When you buy a bond, you are effectively loaning your money to the bond issuer. In return, the issuer promises to pay you back plus interest payments regularly. Basically, when an (bond) investor loans money to the bond issuer, the issuer must make regular payments of interest for the use of the funds.

Who can issue a bond?

Corporations, municipalities and the US governments are the issuers of bonds. They issue different types of bonds. When a corporation issues a bond, the bond is classified as a corporate bond, for example. Bond issuers issue bonds to raise working capital or funds.

There are many aspects of bonds and bond investing to discuss. We will discuss more about bonds later. For now, if you want to learn about bonds, you can go to http://money.cnn.com, http://www.bloomberg.com, and http://all-about-bonds.info. Next time we discuss bonds we can talk about bond interests, maturities and other important factors you should know when investing in bonds.