Financial Wealth Ideas

Investing in bonds - the most secure investment in the securities market. This tool is recommended for those who are important to complete the preservation of capital income is slightly higher than on the deposit in the bank. Bondholder receives from its fixed income investments in the form of interest payments. In addition, in many cases the bonds are sold at a discount (a discount), and they repaid the borrower at face value. The difference between purchase price and the nominal value - the income investor. This tool is very similar to bank deposit - the money it invested in a certain period of time under the pre-known interest rates. But the bond has two main advantages: as a rule, the higher yield on a corporate bond issue and an opportunity to collect the money without losing nabezhavshih percent. If the early closing time deposits in the bank interest is lost, the investment in bonds completely liquid - they can always be sold with no loss of interest for each day of ownership of bonds. Bond Market - is a market for conservative investors (unlike the stock market). Price fluctuations in the market is proportionally small compared with the strong dynamics of quotations of shares. For investors, the main thing - it is the interest (coupon payments), while the change in market value of bonds also affects the yield. Corporate bonds are more reliable than stock, and more profitable than bank deposits. The yield of corporate bonds ranged from 8 to 18% depending on the reliability of the issuer of bonds. The market draws a large variety of issues of bonds, of which the investor can choose the best for a combination of yield and risk. There are bonds of reliable, large companies with low coupon payments, there is also a "wasteland" bonds of small companies with high interest payments. A particularly high rate of return on bonds for new small companies that are first-to-market their securities. Russian Government bonds (OFZ) is not of interest to mass because of their low investor yield (around 8% per annum). Bonds - debt securities. After purchasing the company issuing the bond, the investor becomes a creditor. The Issuer undertakes to pay the bondholder at the end of its nominal value of bonds and advance the well-known or easily predictable stable income as a percentage of par value. Bonds are issued the company a wide range of industries, as well as banks. In 2004, more than 80 companies and banks have issued their bonds. Among them were as high, and less reliable issuers. Bonds can be sold at any time or wait until the maturity of the bond issuer (the term bonds of 3-5 years). Accumulated revenue for the coupon and par value of bonds listed on the investor's account, opened at the broker. Major trading bonds are maintained in the Stock Market Section of MICEX. You can buy the bonds in the same way as shares - through the Internet. All the major stock market data for each bond issue broadcast bidders and are available through the trading terminals. However, in order to buy bonds, not necessarily set at the trade terminal and deal with Bonds over the Internet. Buy Bonds for you will be able to broker when you give order on the phone. Key indicators for measuring bond Bonds are generally considered a safer investment instruments than equities because their owners have a priority claim in the proportion of assets in the event of liquidation or restructuring. For issuers of bonds are a reliable alternative to banks and other lenders that may offer less attractive financial terms, than the capital markets: for example, higher interest rates on loans. In the process of investing in bonds needed to pay attention to several key indicators, including the maturity date, the conditions of early redemption, credit quality, interest rates, price, yield and tax status. Taken together, these factors allow the investor to assess the real value of debt and decide to what extent this type of investment consistent with its investment objectives. Maturity. By maturity (maturity) is to pre-determined date in the future, for which the nominal value of bonds should be returned to the investor. The maturity of bonds is usually run in the range of one to 30 years. Ranges maturity are classified as follows:

* Short term: - up to 5 years; * Medium: - 5 to 12 years; * Long term: - of 12 years and above.

Some bonds have a clause for early repayment, or "withdrawal" (redemption provisions, call provisions), which allows the issuer (or requires it) to buy back their investors to maturity, upon a predetermined date, paying with their nominal value. Issuers of bonds sold bonds to the right of early repayment or withdrawal (callables), to provide a relative freedom of action, while retaining the right to redeem the bonds prior to maturity after a predetermined date. This right is essential for the issuers of bonds in a falling interest rate, because it allows them to withdraw from the treatment of existing debt, to issue a new - in the same amount, but at a lower interest rate. In the case of a "revocation" Bond investors returned to the nominal amount of debt in cash, after which they are far less attractive opportunity to reinvest in more expensive instruments with a lower yield. This risk is called reinvestment risk. Investors wishing to avoid this risk can acquire irrevocable bonds (bullets) with a fixed maturity date, produced only once, which is not possible early withdrawal from treatment. The yield of this type of paper is usually lower than for bonds with right of revocation, but the issuer can not compel the bondholders to pay them until the deadline, regardless of changes in the levels of interest rates. There are so-called bonds with the option "put" (put bond), which, in contrast, gives the investor the right to require the issuer that he bought his papers on a certain date before maturity. Investors typically use it when in need of cash, or when interest rates rise significantly in comparison with the level at which they were at the time of bond issuance. In this case, bond holders may reinvest the money received in securities with higher interest rates. Before you buy a bond, an investor should determine whether the conditions of sale clause for early repayment, and, if available, to make sure that he will receive income for the first possible date for early redemption, and not only income at the date of redemption. Bonds sold subject to prior redemption, usually have a higher annual income to offset the risk associated with the possibility of a premature withdrawal from the treatment.