Considering using bonds for investing in your retirement account? Before you make any commitments, take time to understand exactly how cooperate bonds work, the benefits they offer and the restrictions associated with them.
We are now facing an economic situation similar to about 20 years ago, and I know from experience that you’re not going to like what’s about to happen to you and your important money.
Just a simple rate movement over time of 3% (3.25% discount rate) would reduce the actual value of all inforce US Treasuries by as much as 40% of their market value. Think what would happen if interest rates went even higher? Disaster would loom and trillions of dollars would evaporate if these assets were liquidated. Of course there would be a winner: the US Taxpayer. Treasuries would be replaced with a higher earning interest rate bond, but at a far less value a third of its market value of the original bond.
Using golf as an example makes bonds easy to understand and relate to.
The attraction to owning municipal bonds is twofold, limited exposure to loss and tax advantage interest. Many bond owners also purchase insurance on their bonds to ensure safety and security are part of the equation. With the financial meltdown from 2008, concern over exposure to loss has become more and more critical to investors. If [...]
Are municipal bonds tax-free? Might want to make sure. Municipal securities, also known as "munis," are bonds issued by governmental entities such as states, cities, counties, and other organizations. The bonds are sold to raise money for public interest projects such as schools, bridges, roads, and other municipal construction needs to benefit the public. Like [...]
If an investor is thinking of investing in bonds, the first rule to learn is: a bond is nothing more than a debt instrument, a loan. Think of buying a bond like making a loan to a corporation, government, federal agency or other organization. Bond issuers understand that investors are not going to invest without [...]
Are Municipal Bonds Really Income Tax Free? Overview Of Municipal Bonds Municipal bonds (also known as “munis”) are attractive to many investors because the interest income is exempt from federal income tax and in many cases, state and local taxes as well. Also, munis often represent investments in state and local government projects that have [...]
Zero coupon bonds pay no interest, you buy at less than face value Zero coupon bonds are bonds that do not pay interest during the life of the bonds. Zero Coupon bonds are purchased at a discount and they will fund the face value at maturity. A portion of the funds at maturity will [...]
If you get the chance to see the movie, “The Big Short” take it. After watching the movie. I went home to take a shower and try an get some of the Wall Street scum off me that had come from watching how horrible (and stupid) Wall Street is. It seems to me that when [...]