Bond Invest

Understanding bonds should be easy

Welcome to All About Bonds, a tutorial site for the newbie investor.

In today's crazy world of day trading, Cramer disciples, and options traders - bond investing seems to be a forgotten art of the game. That is a shame, because bonds should be a handy device in every investor's toolbox.

How do bonds work?

Bonds are loans.

Yup, they are simply loans. Not satisifed with that 3 word answer? Read the Bond Investing tutorial for a more comprehensive introduction to the world of bonds.

How much can I make?

Investors researching bonds on the internet ultimately care about one thing - money.

If you already have a basic understanding of bonds, and are ready to dive into the math of potential gains and losses, read the Earning and Losses tutorial.

How are bonds rated?

Ever had a company run your credit score? Of course you have

Well, now it is your turn. One of the cool things about bonds is that they allow investors to run credit checks on corporations and local governments. Read the Bond Rating tutorial to see how.

Bond Dictionary

Discount: Buying a bond below par value
Par Value: The principal repaid on maturity date

Read more bond definitions

BOND COMPARISON CHART
Bond	Par Value	Maturty	Rated	Tax	Risk and Returns	Large Initial Investment?
T Bills Short term debt issued by the federal goverment to pay for federal operations	$10,000 Variable amounts up to $1,000,000	3 months 6 months 1 year	Not rated	Exempt from state and local taxes	Lowest interest and lowest risk	Yes
T-Notes Interim debt issued by the federal goverment to pay for federal operations	$1,000 $5,000 $10,000 $100,000 $1,000,000	2- 10 years	Not rated	Exempt from state and local taxes	Lowest interest and lowest risk	No
Treasury Bonds Long term debt issued by the federal goverment to pay for federal operations	$1,000 $5,000 $10,000 $100,000 $1,000,000	Over 10 years	Not rated	Exempt from state and local taxes	Lowest interest and lowest risk	No
Corporate Bonds Issued by companies to finance business operations	$1,000	Short term 1 - 5 years Intermediate 5 - 10 years Long term 10 - 20 years	Yes	Taxable	Higher interest and higher risk than government bonds	Yes
Municipal Bonds Issued by state, city, and other local goverments to finance public operations	$5,000	1 month - 40 years	Yes	Exempt from federal taxes Some are exempt from state and local taxes	Lower interest and lower risk than corporate bonds. Upper tax bracket invevstors benefit from the tax exemption	Yes
Agency Bonds Generally associated with state agencies (such as FHA) and mortgage associations (such as Fannie Mae)	$1,000 to $25,000 and up	30 days - 20 years	Some bond issues are rated by some agencies	Generally exempt from state and local taxes. However Freddie Mac and Fannie Mae are NOT tax exempt	Generally, higher interest and higher risk than Treasury Bonds	Yes


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The enclosed materials are neither an offer to sell nor the solicitation of an offer to buy any financial instrument. *Please be advised that prospectus's contain this and other information. Please read the prospectus carefully before investing. The views expressed on this site represent the current good faith views of the authors at the time of publication. Please be advised that these views are subject to change at any time and without notice.

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