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What are Bonds?

Emily 0

What are Bonds – James Bonds

Bonds. The most unsexy investment option.

There we go. Problem solved. Hello Bonds: Pierce and Daniel.

Now that you’re more relaxed (and slightly turned on…)

…bonds can be issued by companies and even governments. It is essentially debt. Like your mortgage. Governments and companies borrow your money to invest in things.

And just as you must repay your mortgage to the bank, bonds have to be repaid too. The date that the bond must be repaid is called the maturity date.

Just like banks collect interest on the money you borrow to purchase your house (nothing is free, right?), bonds will pay you interest in the form of a coupon. And no, you can’t extreme coupon a bond. Note to self investigate extreme couponing bonds…

Bonds can can pay coupons at either a fixed or variable rate.

With all this information, you can figure out exactly how much you will earn from investing in bonds. But more on that later.

Baby is in bed, time for some 007.

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