What are Bonds?
Management of when thinks of establishment of new company, the look out for various modes options to raise finance. Bond market is one such best option used by the management to raise large capital to establish a company. When a large amount of money is invested in the market any one would be scared about the encountered risk. Bond markets though offer high risk will keep the risk of the investors suppressed by paying interest on the periodic intervals and also the principal amount at the time of maturity.
Why should I Invest in Bonds?
It is believed that making a high investment in stock market is a grievance that ultimately leaves you bankrupt on the controversy it is again believed that high returns always need huge investments. Many of the no voice investors are confused by these two statements. The only soloution is to clear this confusion in investing in the bond market. Though investing in Bond market requires a huge capital, it is more secured than any other investment options like securities and mutual funds. The investor would never go bankrupt by investing in a bond market; instead he earns periodic returns in form of interest and principal amount on maturity of the bonds. Certain types of bonds have the investments backed by the assets of the firm to meet uncertain situations. Various types of bond are as follows :
These bonds are issued by the local municipal corporations and finance raised through these bonds is utilized in fund local projects.
These bonds are issued by the corporate to raise finance to fund the internal projects. Though investment in these bonds involves higher risk this can be suppressed to an extent by payment of interest.
We can conclude that government bonds are totally risk free. They are issued by government organizations the best part of these bonds is that some government bonds are totally tax exempted. The finance raised from these bonds is utilized towards welfare of the society.
These are also one type of bonds issued by the government, Investing in these bonds, the investor will lose the benefit of conversation of bonds and they can not be sold to any body other than the issuer