The bond market is made up of of securities that are in essence loans from investors to borrowers. Not limited to just companies and organizations, governments are one of the chief bond issuers in the world. Investors, private individuals, banks, insurance companies and pension funds are all able to purchase bonds.
Coupons are the means that affect how much the investor gets paid. The coupon is a rate of interest that is paid to the lender across a fixed amount of time. Bonds are also known as fixed income securities due to the fixed interest rate that is well-known at the start.
Why trade bonds?. Bonds have some advantages over investments such as trading currencies. When you buy a bond you are investing in debt rather than equity (stocks). Debt-holders always get paid before shareholders should a crisis emerge.
Compared to the currency market, the bonds market offers a high level of safety. Nevertheless, there are no markets that are without risk. The risks are present. But there are typically numerous careful bonds available for purchase. This is because profits are traded off with added security. Due to its cautious temperament, the bonds market is routinely unnoticed.
America is the chief issuer of bonds with slightly more than 40% of the worldwide bond market while Japan comes in second. Some 80 trillion US Dollars in bonds we realized in 2008 making the bond market far smaller than either the forex market or the stock exchange market.
Bonds are not without their disadvantages. Big profits come only to those that purchase big quantities outside the means of most. Secondly, it may not be easy selling your bond should you intend to give it up. Unlike the currency market, where 90% of orders can be sold in a second. Finally, bonds cannot be traded on the market like stocks or currencies are.
In Malaysia, bonds should still be seen as trustworthy investment opportunities. Those of you in Malaysia that find currency trading a bit too risky will find bonds to your liking. Profits are on the low side owing to its cautious nature.
Coupons are the means that affect how much the investor gets paid. The coupon is a rate of interest that is paid to the lender across a fixed amount of time. Bonds are also known as fixed income securities due to the fixed interest rate that is well-known at the start.
Why trade bonds?. Bonds have some advantages over investments such as trading currencies. When you buy a bond you are investing in debt rather than equity (stocks). Debt-holders always get paid before shareholders should a crisis emerge.
Compared to the currency market, the bonds market offers a high level of safety. Nevertheless, there are no markets that are without risk. The risks are present. But there are typically numerous careful bonds available for purchase. This is because profits are traded off with added security. Due to its cautious temperament, the bonds market is routinely unnoticed.
America is the chief issuer of bonds with slightly more than 40% of the worldwide bond market while Japan comes in second. Some 80 trillion US Dollars in bonds we realized in 2008 making the bond market far smaller than either the forex market or the stock exchange market.
Bonds are not without their disadvantages. Big profits come only to those that purchase big quantities outside the means of most. Secondly, it may not be easy selling your bond should you intend to give it up. Unlike the currency market, where 90% of orders can be sold in a second. Finally, bonds cannot be traded on the market like stocks or currencies are.
In Malaysia, bonds should still be seen as trustworthy investment opportunities. Those of you in Malaysia that find currency trading a bit too risky will find bonds to your liking. Profits are on the low side owing to its cautious nature.
About the Author:
Click here for more reading on Bonds and Finance in the links mentioned. The Author has been investing online for over 7 years. When Prema De Silva is not trading the currency markets, she expands her knowledge on online investing and oversees the operation of a popular mutual Funds trading website.
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