Articles » Government Bonds
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Government Bonds - Risks and Rewards
It's often said that government bonds represent one of the lowest possible risks for an investor. In general, true - but much depends on which government issues them and which investor is buying.
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If you are a regular investor in bonds, you will definitely have known by now that there are some bonds that do not actually give out any payments as interest. These bonds pay interest only on the maturity of the instrument instead of regular payouts like other bonds. Hence, they are called as Zero Coupon Bonds. In every zero coupon bond, interest is accrued annually. This accruing of interest is necessary, because conventionally, the annual increase in the value of the zero coupon bonds in question are reported as interest earned.
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5 Ways To Protect Your Bond Portfolio From Rising Interest Rates
The Federal Reserve recently raised its target federal funds rate for the first time since March 2000. This could be just the tip of the iceberg, though, as many experts believe rising inflation and a strengthening economy will spur continued rate hikes for the foreseeable future.
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Investing in Bonds for a Secured Future
There may have been more than one occasion when you might have had to borrow money from a friend: at the coffee shop, in the office, or even for the cab service. When you run out of money, borrowing is usually your only way out. Juxtaposing the same with big corporations and the federal government, one would find it is not that easy for them. Not only have they to repay the money owed, but to top that amount with interest. That is why companies are made to sign a ‘bond’ by law, promising the repayment of the money owed. It is a formal kind of security to ensure due payment.
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4 Types Of Bonds To Choose From
Municipal bonds are state and local government bonds that pay interest that's federally tax free and state tax-free to residents in the state of issue. For example, if you live in New York and buy a bond issued by a New York government agency, you don't owe New York state or federal income tax on the interest.
