A bond is a debt security item, similar to an IOU. An investor lends money to a company, and the company issues a bond to the investor in exchange. Depending on the terms of repayment, the issuer may have to regularly pay interest on the bond to the investor or pay off the debt by a specified date.
Stocks can be a better investment, but the market is unpredictable in the short-term. On the other hand, bonds can be a good investment for retirement purposes, as well as for the short-term in certain situations.
An example of when a bond is a smart choice for a short-term investment is where a student planning to go to graduate school decides to work for a few years before enrolling. Since the student may need money in the relatively near future, a fixed income security such as a bond is a good investment. Any situation that would make more sense living under a fixed income makes a bond a rational choice.
There are a few characteristics every investor should know about bonds in order to determine a bond's full value. These include:
There are several kinds of bonds, and some bonds fall under more than one bond classification. Here are some common bonds that many people have either encountered or at least heard of:
Consultation with an attorney for most investment decisions is probably unnecessary. However, if there is a dispute with your broker, such as when you lose a significant part of your investment based on the broker's bad advice, you should contact a lawyer immediately. An experienced investments lawyer will help explain your rights as well as preserve any possible remedies you may have.
Last Modified: 09-17-2014 02:36 PM PDTLaw Library Disclaimer
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