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Types of Bonds: Uses of Federal, Municipal and Corporate bonds.BY: Deena David | Category: Business and Finance | Post Date: 2009-11-14
Savings are very important for each and every person. When a person saves money, they do it so that they can use it in the future. There are some instruments of saving that give large returns to the investor, but they may also be very high risk investments where the capital may even be lost. At the same time, there are certain investments where the returns may be very less compared to the high risk investments, but in these low interest schemes, there is a sure appreciation of the capital. When a person plans to invest money in various investments, the individual has to give adequate thought to make sure that they have a right balance of investments in both these kind of options. The age of the investor is also very important in this investment. When an individual is young, the person can take more chances and risks. At the same time, as a person gets older, the person should be very concerned about the capital loss that can happen and try to save more in low risk investments. The United States Government bond is one of the lowest risk savings. There are various types of bonds that are issued. They are: 1. Federal Bonds: These are the bonds that are issued by the federal government of the United States and are floated to increase the revenue to perform developmental work. 2. Municipal bonds: These are issued by certain municipalities to make money so that they can be used for developing the locality. It is also used for various projects. 3. Corporate Bonds: These are the bonds that are issued by the corporate and they do so to expand their business and also to diversify into various other businesses. How the bonds work: This investment is a very safe investment where the individual who invests, does so by paying a specific amount of money. The person or group that issues the bond, does so for a specific term. In return for purchasing the bond and giving money, the investor is paid a certain percentage as interest each year either at simple interest or a compound interest. When the specified term is over, the individual returns the bond and gets the money in return along with the interest. Benefits of Bonds: Bonds are safer: When compared to many other investments like equities and various other methods in which a person invests to earn returns, the bonds are safer because they offer the person some kind of security in an unpredictable market scenario. Returns: The returns are guaranteed for a person. This is because the bonds are issued by Governments and they will give a return on the investment for the investor. Helps Government to develop the nation: The money that the investor invests is put to good use by the Governments that help to make the various development projects possible. This is one way in which the government is able to get money from the public and both the government and the public benefit. Article Source: http://www.saching.com About Author / Additional Info: I have completed my Masters Degree in Paediatric Nursing. I am a writer with a passion for writing. I have been writing for some blogs and other sites. Comments are welcome at the following e mail address: deenaanddavid@gmail.com Additional Articles: * Company’s role in supporting employees * Important things to know about mutual funds before you invest in them * My kids hate fruits and vegetables. Veggies are boring but healthy * Benefits of Drinking Tea - Why people drink Tea? * Methods of preventing and removing foot odor Does this article violate or infringe on your copyright ? It is a violation of our terms for authors to submit content which they did not write and claim it as their own. If this article infringes on your copyrights, then use our Contact us form with the detailed proof of infringement along with the offending article's title, URL and writer name. If you do not hear back from us then contact us again in another 10 days. Thank you. Comments on this article: (0 comments so far) * Additional comments are now closed for this article *
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