Traditional bonds offer simple-interest coupon payments over the course of a defined maturity period. When the bond finally matures, the bond’s par value is paid along with the last coupon payment.
The yield curve plots interest rates comparing rates with time to maturity. However, the yield curve is more than a simple graph. The shape and slope of the curve is an indicator of current and future economic conditions.
Conservative investors often have a significant portion of their assets in bonds, for safety, but this can make money difficult to get to. A bond ladder gives you the benefits of bonds while keeping your money reasonably liquid.
Bonds should be a part of any investor’s portfolio and investors have a lot of choices today with specialty bond funds, such as SRIs. However, does an investor have to forsake good returns to invest with their conscience? Here is a set of criteria to evaluate current SRI bond funds on all fronts.
Most investors find junk bonds risky as they are below investment grade. However, these bonds can offer high rates of return and are highly profitable to bond funds. Investors need to have a complete understanding of junk bonds to determine how to invest in them.
U.S. savings bonds are a safe way to set up a savings plan with amounts starting at $25. However, savings bonds are not just for kids’ college savings plans. These can pay attractive, tax-advantaged rates of interest, prompting many investors to learn about the different types of savings bonds.
Bond investing can become a little more complicated than checking yields and deciding whether or not to buy the bond or bond fund. Bond duration is a great analysis tool which helps an investor predict how a bond or fund portfolio will react to changes in interest rates.
Short selling the bond market produces trading profits if bond prices decline. The steps for how to short the bond market require an understanding of bond prices, interest rate relationship and which securities to use to short bonds.
Bond prices can involve many factors, but they you don’t have to consider them to be too arcane to be understood. Understanding basic terms like par value, premiums, discounts, yield to maturity, coupon rate, and accrued interest can go a long way in helping to understand the more complex concepts.
How do investors make money buying and selling U.S. government securities? The possibilities range from simple buy-and-hold to short term trading in the futures pits.