If an investor is thinking of investing in bonds, the first rule to learn is: a bond is nothing more than a debt instrument, a loan. Think of buying a bond like making a loan to a corporation, government, federal agency or other organization. Bond issuers understand that investors are not going to invest without [...]
Municipal securities, also known as "munis," are bonds issued by governmental entities such as states, cities, counties, and other organizations. The bonds are sold to raise money for public interest projects such as schools, bridges, roads and other municipal construction needs to benefit the public. Like all bonds, munis pay a specified amount of interest [...]
The attraction to owning municipal bonds is twofold, limited exposure to loss and tax advantage interest. Many bond owners also purchase insurance on their bonds to ensure safety and security are part of the equation. With the financial meltdown from 2008, concern over exposure to loss has become more and more important to investors. If you [...]
Zero coupon bonds are bonds that do not pay interest during the life of the bonds. Zero Coupon bonds are purchased at a discount and they will fund the face value at maturity. A portion of the funds at maturity will be accumulated interest (the discount) and the original amount of the purchase price of [...]
If you get the chance to see the movie, “The Big Short” take it. After watching the movie. O went home to take a shower and try an get some of the Wall Street scum off me that had come from watching how horrible (and stupid) Wall Street really is. It seems to me that [...]
Municipal Bonds can be a terrific vehicle to earn a reasonable rate of interest and at the same time escape taxation on the interest. For many investors who are interested in long term investments with some tax advantages the choice of a municipal bond can be attractive. For investors looking for alternatives to qualified (IRA [...]
Our low interest rate environment may offer opportunity for long term bond investors, or does it? In a recent Bloomberg article regarding recent and large bond offerings, I couldn’t help but notice the mammoth size sale recently sold to fund VISA and their acquisition of VISA Europe. In the scheme of thing, it seems like [...]
Just a simple rate movement over time of 3% (3.25% discount rate) would reduce the actual value of all inforce US Treasuries by as much as 40% of their market value. Think what would happen if interest rates went even higher? Disaster would loom and trillions of dollars would evaporate if these assets were liquidated. Of course there would be a winner: the US Taxpayer. Treasuries would be replaced with a higher earning interest rate bond, but at a far less value a third of its market value of the original bond.
We are now facing an economic situation similar to about 20 years ago, and I know from experience that you’re not going to like what’s about to happen to you and your important money.
Considering using bonds for investing in your retirement account? Before you make any commitments, take time to understand exactly how cooperate bonds work, the benefits they offer and the restrictions associated with them.