Investing Made Easy & Simple

Lasting long in the investment business is a testimony to quality by itself. It is a hard thing to achieve stability in a branch of industry defined by fluctuations. Still, we are lasting for three decades now, and our business is only getting better.

The most important things you need to know about bonds
The financial world we know, today is certainly a complex being. It operates and lives under ever-changing laws which sometimes seem like magic to the general public. Even though so much of our lives depends on the markets, brokers, and bonds – we rarely think about it, unless we have to. The world of bonds, investments, loans and banks is something regular people rarely delves in. But, if you wish to get started learning about it, this is the right place to do it.

What are bonds?

Bonds are pieces of paper. Only, this piece of paper can hold a very high value if you bring it to the bank. It’s not money by itself, and you can’t buy a dinner with it. But, you can hold it in the name of interest or receive money for it in a bank.

Are bonds stock?

Bonds also not the same as the stock. While stock also represents a theoretical value, they differ in nature. Owning stock makes you a shareholder and buying stock will tie you to a company or an entity bound by stock. Bonds, on the other hand, transfer no possession. Owning a bond doesn't make you a part of the company or investor you bought it from. Banks issue the bonds in most cases and title them to the investor or bearer. It holds the bond information written on it so bank clerks can check its value and legitimacy. Bonds are also not bound to the value of the company or the investor. You can cash them no matter what the status of the investor is. This differs significantly from the stock significantly.

Who uses it?

The primary source of bonds are countries, or more precisely, the governments of individual countries. Not every country in the world issues bonds and not all bonds are issued this way. Other entities that issue stock include large organizations like banks, namely the World Bank and ESM. Bond buyer, on the other hand, can be virtually anyone. In most cases, bonds are purchased by the investors whose primary job is the bond trade. Also, other banks and funds buy bonds, for themselves and customers alike. You can also buy bonds, but we would recommend doing it through a broker. The world of bond trading is a highly sophisticated one.
6 ways to use bonds in the best possible way
Bonds have a versatile use in the financial world. Even though they have somewhat lost their popularity over the decades, they still hold their value and importance. There are several different ways you can use bonds – from saving to financial gain.

Save your money

You can save money with bonds. They are superb at retaining their value. Security allows you to make long-term investments by purchasing saving bonds and holding them until maturity. The value of your bond is usually guaranteed by the issuing government or another legal body, making them a safe choice when it comes to saving.

Preserving principal

This term refers to the share of bonds we call low-risk or risk-free bonds. This kind of bonds is usually issued in the short term and represent a kind of loan. They are excellent at holding their value, making them as valuable and safe as real cash.

Interest - Fluctuations are key

You can use bonds to control and use the interest rate fluctuations to your gain. The price of a particular bond, especially the high-quality one can be accurately guessed based on the movement of the interest rate. Bond value falls if the interest rates rise, in most cases. This allows you to strategize with your investments.

Security

Looking at the long term investments – bonds naturally stand out. You can predict their value change with a high degree of accuracy. Banks, trust funds, and many insurance houses use bonds as their long-game investment plan for this very reason.

Immunization

This relatively complex term refers to the practice of securing your future monetary needs by purchasing bonds. These bonds usually have the same duration and maturity time. They aren't going to make you rich but can be a sound financial plan for responsible institutions and individuals. Covering your future need with bonds is an excellent way to secure your future, hence the name – immunization.

Portfolio

Versatility is one of the best signs of a sound financial portfolio. Investors often overlook bonds as means of investment. This makes them less likely to show up in a portfolio. They are necessary for the diversity of your investments. Also, they can balance out some of your other investment, especially if you manage to find the ones with negative correlations. Bonds are an old and powerful investment and saving tool. Today, they are used less, in contrast to some other options – which leaves intelligent individuals a lot of chances for success.
Why should you choose bonds over stocks?
Bonds may seem like an archaic mean of transferring value, but they are far from it. As they are not as exciting as the stock options, people tend to assume that there is no value in bonds. The truth couldn't be further from reality. There are many ways to use bonds and several reasons why they are, at times, better than stock.

Safe investment

The main difference between the bond and stock is in their nature. With bonds, you don’t own a part of a company or any shares, you own debt, in a way. This means that your bond’s value is less likely to be influenced by the economy. In the worst case – if your company goes bankrupt, you will still get paid a part or entirety of your investment. Stockholders, on the other hand, often get nothing. As a way of making a fortune – bonds may not be the best option, but they are the safer one. There is no risk-free equivalent to bonds in the stock world.

Long term security

As we said – bonds are not as glamorous as stock. And this makes them more secure. They won’t make you as rich, but in particular conditions of the market, they are life savers. Choosing bonds over stock significantly improve your security over an extended period. They are more stable and far more reliable. This makes them an excellent retirement plan. Surety bonds are also a great way to protect yourself and investment. Their long time stability can often help you out when you hit a bump on the stock market.

Bank?

You can go and put your money into a bank, or you can go and invest in a bond. Which one is better? Well, it greatly depends on the conditions and the particular situation and conditions. Still, there are more than enough cases where bonds are simply better. Bonds are safe and stable, making them a likely source of income for the years to come. Asides from the retirement plans and insurance financing, they are ideal for college funds for your kids.
Balancing
Investing in bonds can do wonders for your portfolio. The amount of resource you put into bonds is a complex matter and involves many changing factors. One rule of thumb tells us that this number should rise with age. Still, this can be misleading and confusing. Investors are the ones making the decisions and should decide accordingly to the market. Just make sure to remember that you can always use bonds as a protection method and make sure your investment is safe in the long term.