Learning about bond basics can help you understand one of the most popular types of investment that is available in the market today. Bonds can benefit investors in a number of different ways, but they are definitely not for everyone. Here are a few things to consider about who should invest in bonds.
When you purchase a bond, you are going to be able to receive a fixed interest rate over the life of the bond. This means that every month, you are going to receive an interest payment from the issuer of the bond.
In addition to receiving a fixed interest payment, you will also be able to receive your original investment back at the end of the bond term.
Bonds are considered to be very safe as an investment. If you invest in corporate bonds, you are considered a creditor to the company. This means that even if they go bankrupt, you will have a good chance of getting your investment back.
Most of the time, individual that are living on a fixed income will be able to benefit from this type of investment the most as it can supplement their income. If you are trying to invest with a short time frame, these can also be beneficial because of their safety and steady interest.
The flower bond was a type of bond that could be purchased by an individual in order to provide money for paying estate taxes. When an individual with an estate passes away, estate taxes will be charged by the federal government if the value of the estate is over a certain amount. In order to prepare for the taxes and lessen the burden on their families, individuals could purchase these bonds, which would pay their face value when the bondholder passed away. This type of investment is no longer available; flower bonds stopped being paid in 1998.