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Buying bonds in laymans terms
Posted on 12/5/12 at 10:53 am
Posted on 12/5/12 at 10:53 am
What am I looking for? Is buying them through my online brokerage account ok? Keep it simple. I slept through my Finance class at LSU and the only exam I didn't make an A on was the one on bonds (made a C, did not get that shite). I have about 15k that I don't want invested in anything risky right now. I've put all I'm comfortable with into stocks.
Posted on 12/5/12 at 11:20 am to braindeadboxer
Bonds, as you may now, are fixed-income investments. Their income comes in forms of payments in fixed intervals. These payments may come from a variety of sources, detailing the type of bond it is. For instance, companies may issue a bond to raise money for a revenue-generating project. That income would be how the debt would be paid off, i.e. your income. Government bonds, usually tax-free at certain levels, are usually paid with revenue generated by taxes.
With that being said, there are a multitude of bonds out there. Of course, the riskier the bond (chances of it defaulting) will yield a higher interest payment to account for the risk.
You can invest in foreign bonds, municipal bonds (don't have to pay taxes at all on these) or corporate bonds.
You may also want to look at some bond funds that diversify holdings in different types of bonds. It all depends on your financial strategy really and what you are looking return.
Let me know if you have any questions.
With that being said, there are a multitude of bonds out there. Of course, the riskier the bond (chances of it defaulting) will yield a higher interest payment to account for the risk.
You can invest in foreign bonds, municipal bonds (don't have to pay taxes at all on these) or corporate bonds.
You may also want to look at some bond funds that diversify holdings in different types of bonds. It all depends on your financial strategy really and what you are looking return.
Let me know if you have any questions.
This post was edited on 12/5/12 at 11:23 am
Posted on 12/5/12 at 12:19 pm to braindeadboxer
I fully believe corporate and emerging market bonds will provide higher returns over the next 3-5 year time horizon than stocks.
Don't buy treasuries, not anywhere near the return profile right now to compensate you for your risk. I could go into a multitude of reasons but you said to keep it simple.
Don't buy treasuries, not anywhere near the return profile right now to compensate you for your risk. I could go into a multitude of reasons but you said to keep it simple.
This post was edited on 12/5/12 at 12:20 pm
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