Bonds are an investment in which you are basically loaning money to a federal, international, state or local government, a corporation or project. There is a time period for the bond that can last up to 30 years or be as short as 1 year. Interest is paid to the investor and is based on the credit worthiness of the bond holder along with the length of the bond.

The value of the bond changes based on the movement of interest rates. However no matter how interest rates fluctuate, the specified interest must be paid according to the promises of the bond or note.

When purchasing bonds the yield or rate of return over time is important. Others factors like financial strength of the company or municipality should be considered. Each bond has an end date where you are paid back your principal. There is a risk of losing principal through interest rate fluctuations or if the company defaults through bankruptcy.

A diversified portfolio will have a portion invested in bonds as they typically have an inverse relationship to the stock market. There are many types and care needs to be taken before investing a bond.

We coach our clients through the process as it is up to each investor to make the final decision as to when to buy and sell. Our role is to ask questions, investigate and provide information to make a decision.

Where many people fail at investing is when they don’t ask good questions, don’t review income statements or pay attention. Let’s talk strategy!