Comments on: Bonds http://www.abcsofinvesting.net/what-are-bonds/ Learn the basics of investing with 2 short posts per week Sun, 07 Mar 2010 17:57:39 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: 2009 Tax Law Changes For Individuals | Good Financial Cents http://www.abcsofinvesting.net/what-are-bonds/comment-page-1/#comment-301 2009 Tax Law Changes For Individuals | Good Financial Cents Sun, 01 Feb 2009 21:08:02 +0000 http://www.abcsofinvesting.net/?p=238#comment-301 [...] caps are raised for tax-free EE bonds used for education purposes. In order to qualify, parents who are married must file a joint return. [...] [...] caps are raised for tax-free EE bonds used for education purposes. In order to qualify, parents who are married must file a joint return. [...]

]]> By: kitty http://www.abcsofinvesting.net/what-are-bonds/comment-page-1/#comment-59 kitty Thu, 30 Oct 2008 16:46:06 +0000 http://www.abcsofinvesting.net/?p=238#comment-59 Peggy, you can buy bonds as follows: - for treasuries you can buy directly from the government - you can open an account on treasurydirect.gov. This website explains everything you need to know about government bonds. You can also buy them from banks. - for municipal and company bonds, you need to have a brokerage account like eTrade, TD Ameritrade (which I use) or any other. You can buy treasury bonds through the broker as well, but then you are buying bonds on what is called a secondary market i.e. you buy bonds that other are selling at today's price. This applies to all bonds sold at brokeragre: if your broker is an underwriter for a specific company/municipality, then you buy bonds as they are issued. Otherwise, you buy them at secondary market for what people who bought them first want to sell them to you. It's too long to explain, google for bonds - there is bonds 101 explanation on both yahoo finance and cnnfn.com. You should read it, and understand the terminology like yield to maturity, callable, etc. before you invest. Ray - I agree with you. With individual bonds, there is a maturity date, so unless the company defaults one has an option of holding to maturity and getting principal and interest back. Bond funds don't have maturity date so their value fluctuate with the value of bonds on a secondary market. The value of bonds goes up when the interest rates go down, but the value of bonds can drop a lot when the interest rates go up. Or in situations like the credit crisis we've had when there was a lot of fear and people didn't want to buy bonds. Joseph - you can go on yahoo finance, select Investing->bonds. Then you can search for individual bonds to see yields. Because of credit crisis there are some great yields. There were better last week, though. Last week I was able to get a AAA NY state municipal bond with tax-free yield-to-maturity of 5.36 (it was sold below value). I am in 28% tax bracket and live in NY State, so for me it is about the same as taxable 8%. Too bad I only had 5K available as most of my cash is locked in CDs and the rest is invested. The week before I could municipal bonds with tax-free YTM of 6.5%, but it was gone by the time I transferred cash to my broker. Same with company bonds -- a couple of weeks ago there were some highly rated bonds with two-digit yields (and low resale value) like 18% on an AmEx bond. Now the yields came down a bit. I have a large CD that matures in mid-November, but I am afraid that by then the yields will come down. Peggy, you can buy bonds as follows:
– for treasuries you can buy directly from the government – you can open an account on treasurydirect.gov. This website explains everything you need to know about government bonds. You can also buy them from banks.
- for municipal and company bonds, you need to have a brokerage account like eTrade, TD Ameritrade (which I use) or any other. You can buy treasury bonds through the broker as well, but then you are buying bonds on what is called a secondary market i.e. you buy bonds that other are selling at today’s price. This applies to all bonds sold at brokeragre: if your broker is an underwriter for a specific company/municipality, then you buy bonds as they are issued. Otherwise, you buy them at secondary market for what people who bought them first want to sell them to you. It’s too long to explain, google for bonds – there is bonds 101 explanation on both yahoo finance and cnnfn.com. You should read it, and understand the terminology like yield to maturity, callable, etc. before you invest.

Ray – I agree with you. With individual bonds, there is a maturity date, so unless the company defaults one has an option of holding to maturity and getting principal and interest back. Bond funds don’t have maturity date so their value fluctuate with the value of bonds on a secondary market. The value of bonds goes up when the interest rates go down, but the value of bonds can drop a lot when the interest rates go up. Or in situations like the credit crisis we’ve had when there was a lot of fear and people didn’t want to buy bonds.

Joseph – you can go on yahoo finance, select Investing->bonds. Then you can search for individual bonds to see yields.

Because of credit crisis there are some great yields. There were better last week, though. Last week I was able to get a AAA NY state municipal bond with tax-free yield-to-maturity of 5.36 (it was sold below value). I am in 28% tax bracket and live in NY State, so for me it is about the same as taxable 8%. Too bad I only had 5K available as most of my cash is locked in CDs and the rest is invested. The week before I could municipal bonds with tax-free YTM of 6.5%, but it was gone by the time I transferred cash to my broker. Same with company bonds — a couple of weeks ago there were some highly rated bonds with two-digit yields (and low resale value) like 18% on an AmEx bond. Now the yields came down a bit. I have a large CD that matures in mid-November, but I am afraid that by then the yields will come down.

]]> By: Ray The Money Man http://www.abcsofinvesting.net/what-are-bonds/comment-page-1/#comment-43 Ray The Money Man Sun, 26 Oct 2008 19:52:57 +0000 http://www.abcsofinvesting.net/?p=238#comment-43 I think you should stay away from Bond Funds, but picking the right individual Bond is a must for a portion of your portfolio. Even more so now. Great post! I think you should stay away from Bond Funds, but picking the right individual Bond is a must for a portion of your portfolio. Even more so now.

Great post!

]]> By: squawkfox » Fawns, Sunflowers, and Links Oh My! http://www.abcsofinvesting.net/what-are-bonds/comment-page-1/#comment-42 squawkfox » Fawns, Sunflowers, and Links Oh My! Sun, 26 Oct 2008 17:26:35 +0000 http://www.abcsofinvesting.net/?p=238#comment-42 [...] Bonds | ABCs of Investing [...] [...] Bonds | ABCs of Investing [...]

]]> By: Joseph http://www.abcsofinvesting.net/what-are-bonds/comment-page-1/#comment-41 Joseph Sun, 26 Oct 2008 17:05:26 +0000 http://www.abcsofinvesting.net/?p=238#comment-41 Or even better yet, what is the ROI for some bonds Or even better yet, what is the ROI for some bonds

]]> By: Peggy http://www.abcsofinvesting.net/what-are-bonds/comment-page-1/#comment-21 Peggy Thu, 23 Oct 2008 20:35:44 +0000 http://www.abcsofinvesting.net/?p=238#comment-21 In a future article, I'd love to know where/how to buy bonds and more information about any costs for buying them and how to limit that cost. Thanks! In a future article, I’d love to know where/how to buy bonds and more information about any costs for buying them and how to limit that cost. Thanks!

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