Bonds
“Bottoms in the investment world don’t end with 4-year lows. They end with 10 or 15-year lows.” By Jim Rogers, American investor, Financial Commentator based in Singapore.
The advice is to invest in the industry’s stocks you have researched well enough and understood that your investment might go low before touching new highs.
Bonds represent the details of the loan and the payment that the investor has lent to the borrower. Wherein the principal of the loan is to be paid along with the terms of payment. The clause may be for either the issuer can pay for variable or fixed interest payments. Here the borrower may be either a corporation or government entity. The investor in bonds either is a debtholder or a creditor, and the one who takes the loan from the investor is called the issuer.
These happen to be fixed income instruments, and they are used by
● Companies
● Municipalities
● States
● Sovereign
governments
The bonds are used to either finance a project or the operations of that entity.
Types of bonds
● Corporate bonds- are issued by companies to get better terms and get the loan at lower interest rates.
● Tax saving bonds- are tax-free coupon bonds issued by the Government.
● Government bonds- issued by the Government after the maturity of a particular period are called notes/bills
● Bank and financial institution bonds- these are issued by organizations that come under the financial sector.
Then some bonds happen to be differentiated with the rate of interest and the coupon payment.
Features of Bonds
● Bonds happen to be securitized and traceable assets.
● These fixed income instruments come in the fixed and floating rate of interest.
● The prices of bonds and their interests are inversely correlated. If the rates of the bond rise, the costs of the bond take a fall and vice-versa.
Why Invest in Bonds?
Unlike stock market options, bonds aren’t a popular choice of investment. The investors don’t feel the same excitement because they feel the lock-in period is long and want to earn gains immediately. Since bonds don’t carry the same appeal, they have fewer takers than people who dabble in the share market. However, you need to know that bonds provide security and safety that will help you make your investment portfolio diverse and spread your risks out. Since bonds are predictable financial instruments and a guaranteed interest paid twice a year makes them a dependable investment. At the time of maturity, the investor will get their entire principal amount, and the volatility of the shareholdings is avoided.
JC has expertise and strong analytical skills. Therefore, consult and guide its clients for the best bonds available in the market. Despite the risk involved, investment in bonds is known to provide investors with high returns in the long run.As Jwalantham will provide you the right inputs in guiding your investment. Bonds investment not only helps an individual in wealth creation over time but also builds the nation’s capital in the process