how's it going today guys so today we're
going to be talking about bonds and I
don't know if you've ever got these as a
kid I know when I was a kid I had like I
grandparents I didn't understand what
they were because I would see on there
they said $100 on the front of them and
I was like well this is awesome I got
$100 then my parents would explain to me
no really it's actually worth you know
$50 now if you hold on to them they'll
be worth the $400 so they always
confused me for that reason as a kid I
was like well you know it says $100 you
would think it would be worth that but I
want to explain to you how bonds
actually work and a little bit about
those this is basically everything you
wanted to know about bonds but you were
afraid to ask I'll put it that way so
basically a bond is considered a debt
investment money is loaned to an entity
for a period of time it's a fixed period
of time so they let you know beforehand
when you buy the bond how many years
until your maturity date and it
generally has a fixed interest rate
however some have a variable interest
rate bonds are considered a much safer
investment as opposed to buying a
company stock or any kind of mutual fund
because of those two reasons because
they're fixed interest rate usually for
a designated period period of time but
they're generally a lot lower interest
rate than you could see from a mutual
fund or stock so that's why they're kind
of a very overly safe investment just as
a side note here if you are if you have
a 401k and it's one of those vision
plans where plans out for you retirement
date when you start off like for example
I have one I know right now the majority
of my money is being invested in stocks
and over time I think and five-year
increments it's gradually buying more
bonds because they were safer investment
so when you're younger you want more
high-risk investments you want more of
your money in stocks and when you get
older you want more of your money in
bonds even though it's commanding a
lower interest rate than those then
you know then you're gonna get with a
stock simply because it's a safer
investment and you want to have that
security at that point in your life
because you're gonna be retiring sooner
whereas for me off the stock market you
know crashed on me or something happened
to the stocks that I was involved in
with my retirement plan I would have
many years to recover from that
so my entity they're generally well
they're only issued by companies
municipalities States and governments
bonds usually fund projects especially
with companies they'll do a bond for a
project some municipalities do bonds as
well for projects and they can be
another option for a company aside from
going to a bank for a loan so it may be
something they decide to do for whatever
reason is thumb issue bonds to fund a
certain project they're typically issued
at $100 or $1,000 per bond and then
here's a couple of terms that you should
be familiar with if you're reading about
bonds so you understand what it is that
they're telling you they're the face
value of bond is the dollar amount the
bond will be worth at maturity so like I
said when I first got bonds as a kid I
sold a hundred dollars on there and I
was like well this is great I got a
hundred dollars from my grandfather that
was the face value of the bond that's
what it would be worth if I let it sit
for the duration of time for it to grow
to the hundred dollars the coupon rate
is the interest rate issuer if the
issuer pays in the bond so certain bonds
they pay you at a designated intervals
whether it's twice a year four times a
year in almost a quarter they pay you a
coupon rate and that's the interest rate
so it's if it's a fixed interest rate it
pays you quarterly almost like a
dividend or maybe once a year on that
bond the bonds I was involved in were a
Jewish Treasury bonds so they didn't pay
out like that but some company bonds
that other ones do pay on those like
that and then your coupon dates are
basically the dates the bond issuer
makes the payments like I said usually
it's at most once a quarter maybe twice
a year or once a year
pay on those if it's that type of bond
your maturity date is the date the bond
is worth the face value and then the
issue price is the original bond price
that's like what the person purchased
the bond for and like let's say those
bonds those Treasury bonds I got for my
birthday I believe you paid $50 for them
and then I think it was ten plus years
they were worth $100 had I gone to the
bank with that or wherever tried to cash
it in the day after my birthday they
would have given me $50 back because it
had no time to mature and when I did end
up cashing those in I think I've cashed
him in before they were worth their full
face value anyway so I think I got about
70 $80 a bond but you know it was kind
of cool as an interesting way to save
money and I kind of taught me a few
lessons as a kid getting those bonds so
it was kind of interesting thing to do I
think it's kind of going out of style
though I don't know a lot of parents who
are doing the savings bonds anymore so
this is basically who issues these bonds
so if there's a corporate bond that's
being issued by a company generally its
financing a specific project municipal
bonds are issued by states or local
municipalities that can also be
something to fund a local project and
then US Treasury bonds those were the
bonds that I was involved with when I
was younger and these are the bonds that
most people are typically seeing if you
have some sitting around your house or
maybe you have like a box that you have
all your paperwork in your thumb and
through you find a bunch of bonds and
things that have them 100 dollar symbol
on there those are you generally US
Treasury bonds and those are issued by
the federal government let's see next I
wanted to just mention as far as
interest rate goes with a bond the
interest rate of a bond is determined by
two factors quality of the credit as
well as the duration of the bond
generally speaking a longer duration
bond is considered higher risk so if you
have a lower quality credit with a
longer duration that's going to command
a higher interest rate from the market
and if you have a shorter duration bond
with a good quality with good quality
credit for the person that's borrowing
the money it's going to be a lower
interest rate bond that's why the
federal
that's why the federal bonds or the US
Treasury bonds are so low in interest
because there are very safe investment
they're probably as safe as you could
possibly get um that's why I don't I
don't invest in bonds anymore other than
I know I have some in my my 401k but
they're just sleepers for the most part
it's like not a lot of money that you're
getting back in interest and then just
to explain three other things with bonds
zero coupon bonds do not pay out those
regular coupon payments like we said
here are some bonds that pay you know a
certain amount of money every quarter
twice a year once a year zero coupon
bonds do not do that convertible bonds
allow bond holders to convert debt into
stock if they wish to at some point so
if at some point the company is doing
very well they can convert their bonds
into stock and then bullet bonds are the
most common those are where the entire
face value is paid upon maturity there
are no coupon payments so for example US
Treasury bonds are a bullet bond because
you're not going to be getting the money
from them and tell you until maturity or
whenever you sell the bond you're not
getting a regular coupon payment on
those um well that's pretty much it guys
that's like the basics of bonds now it
does get a lot more confusing so if you
do want to dive deeper into this I
encourage you to do your own research
but I looked at a couple of websites
that talked about bonds and I tried to
grab like the best information so this
is like the bare bones information as
far as bonds go and like I said I don't
personally invest in bonds other than
what's in my 401k
I personally trade individual stocks
just something that I like having more
control over my investments I do have a
mutual fund too but I kind of like
trading individual stocks and it's
something I've been doing over the last
couple of months so if you guys are at
all interested in my personal trading
strategy I'll link up in the description
I have my might guide to my investment
strategy in the stock market and I've
actually had pretty good luck trading in
the stock market I make a couple hundred
dollars pretty consistently every week
trading stocks but that's pretty much
all I got for the video on bonds I thank
you guys for watching
#Best Education Page #Online Earning
online earning,make money online, earn money online, online earning, online earning sites,
make money online free, online money income, earn money online free, money online, best way to earn money online, online income site, money earning websites, best online earning sites, easiest way to earn money online, earn money payment bkash, online money income site
Posts
No comments:
Post a Comment