Your Questions About Investing In Bonds

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Steven asks…

questions regarding investing bonds and its interest rare?

can the interest rate of the bond changes before its maturity date? are issuers allow to do that? when you invest in bonds, does that mean you are almost guarantee to get your money back, unless that company goes bankrupt?

financi4 answers:

The yield on a bond can change based on market conditions. If interest rates go up, the value of the bond will go down and vice versa. As a bond holder, you are a creditor of the corporation. If it goes bankruptcy, you might not collect. Check out Yahoo Finance

Charles asks…

Does anyone know any good books/resources in regards to investing in foreign bonds?

I am also interested in knowing about mutual funds or other investment options that deal with foreign bond investing.

financi4 answers:

Try Jim Rogers, him and his wife recently traveled around the globe in search of investment ideas; he just wrote a book on China, and has other books including investment biker about the around the world trip, hot commodities, and adventure capitalist.

Thomas asks…

How does a bond holder make money from investing in bonds?

Why would a corpration issue callable bonds?

how are debentures different from mortgage bonds?

how do state or local governments pay off the principal and interest of municaple bonds issued?

why do municipal bonds pay lower interest rates than corporate bonds?

how do investors make money on zero-coupon bonds?

what is “treasury direct”?

why should you be concerned about a bond’s rateing before you buy it?

why would anyone buy junk bonds?

how do interest rates affect the price (value) of bonds?

financi4 answers:

Going to have agree with Angry Bird… Plopping all of your homework questions at once on here is probably going to yield you little.

I’ll answer a couple for you, though:

“why should you be concerned about a bond’s rating before you buy it?”
A bond rating tells you how much risk there is in holding a bond with that given entity; therefore, it would be wise to keep a low rated bond.

“why would anyone buy junk bonds?”
People buy junk bonds because they yield high return — they are, however, higher risk.

“why do municipal bonds pay lower interest rates than corporate bonds?”
Municipal bonds pay lower interest rates because their pay-off to you is tax free.

Daniel asks…

How should I start investing in bonds, or buy company shares?

I’m planning to invest in bonds/stocks, and purchase company shares. Can anyone help me how can I get started. I want to invest in bonds that is 1 year or more. Thanks!

financi4 answers:

Unless you are in need of current income, you should avoid bonds. They have two strikes against them right off the bat. 1. Interest is taxed at the full tax rate. 2. You are loosing 4 to 5% of your capital annually to inflation despite the fact that bonds currently pay only 5% interest more or less.

Although equity investments tend to fluctuate greatly in price at times, over the long term they tend to return 8 to 10% annually and that return is tax deferred until realized and when it is realized it is taxed about about 1/2 the regular tax rate. Oh yes, did I mention that many equities pay dividends which tend to increase over time and are currently taxed at a favorable tax rate.

William asks…

How do I go about investing in bonds?

I am not really interested in an etf bond fund or something like that. Let’s say I wanted to buy a 10 year bond in company XYZ. How do I go about researching rates and actually buying those bonds?

financi4 answers:

To buy corporate bonds you have to go through a broker. The broker marks up the price on the bond instead of charging a commission, so be careful. Here are a couple of sites to research bonds.

Http://www.investinginbonds.com/

http://cxa.marketwatch.com/finra/BondCenter/Default.aspx

Chris asks…

Would investing in Bonds be a good idea?

I’m eighteen years old and have been thinking of possible ways to invest my money for the future and was wondering if investing in bonds from my local bank would be a smart and secure way to do it. Now I don’t know too much about bonds and was wondering how much I might earn in interest or if a bond could be affected by bad economic conditions. So if anyone could help me out I’d really appreciate it.

financi4 answers:

You don’t really want income (bonds) when you are 18.
You need capital growth (assets)

James asks…

How do I get started in investing government bonds or a Roth IRA?

What is the minimum dollar amount required, are these investments tax deferred, and do you have any ideas for other investments I may not have mentioned.

financi4 answers:

You can invest in goverment bonds or securitis online at: http://www.treasurydirect.gov
You have to open an account and you have couple of option to invest: saving bonds which you can start with as little as $25.00, and Bills, Notes and Bonds which you can start with $1000.00 minimum. There is local and state tax exemption with these securities but you will have to pay federal tax when you will cash in the securities.
For a Roth IRA account you have to open it with a broker, at your local bank you can set up a meeting with the finacial adviser and he/she can help you or might be possible to do it at an online broker.

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