3. Types of bonds
There are different sounds available. For example, government, corporate, agency, mortgage-backed securities, municipal, etc. Also, different maturity level bonds are available; these help in managing the interest rate risk. The treasury bonds available from the US government have maturity dates ranging from 3 to 5 months to thirty years high-interest bonds, on the other hand, which are sold through public security markets, are a little risky and have high-interest rates. Local and state government bonds have higher interest rates, as unlike the federal government, there are more chances of them going bankrupt. Foreign bonds are difficult to buy and are mostly done as a part of a mutual fund. However, investing in them can turn out to be risky. To conclude, even though certain bonds may be risky, or offer a lower rate of interest, buying bonds are a safe option, as they are sound investments. Securing several bonds gives the owner a good credit rating and helps to prove his or her financial stability. Juxtaposing the same with big corporations and the federal government, one would find it is not that easy for them. Not only have they to repay the money owed, but to top that amount with interest. That is why companies are made to sign a ‘bond’ by law.