Different Types of Bonds

Hi! Welcome to my basic investment blog. If you were investing in bonds, do you think you know the different types of bond to invest in? Do you know if it's a safe investment? Maybe after reading my article today you might able to answer those questions for yourself, and determine if it's something you want to do. First, there are four types of bonds available that are sold through Government, Corporations, State and Local Governments and Foreign Governments.

It is said that with bonds you will get back your initial investment, and that it makes the prefect investment vehicle for those who are new to investing, or for those who have a low risk tolerance. Again, you would have to determine that, and maybe with your financial planner. Please review one of my previous articles on the "how to determine your risk tolerance" Click here!

The United States Government sells Treasury Bonds through the Treasury Department. You can purchase Treasury Bonds with maturity dates maybe ranging from three months to thirty years. Treasury Bonds include Treasury Notes (T-Notes), Treasury Bills (T-Bills), and Treasury Bonds. All bonds Treasury Bonds are backed by the United States Government, and tax is only charged on the interest that the bonds earn.

Corporate Bonds are sold through public securities market. And this is essentially a company selling its debt. They are a bit risky if the company goes belly up, then the bond can become worthless.

State and Local Governments, unlike bonds issued by the federal government, these bonds may have higher interest rates, and are free from income taxes-even on the interest. This is called Tax-free Municipal Bonds. To learn more about "what is a bond". Visit here!

Purchasing Foreign Bonds is actually difficult, and is often done as part of a mutual fund, and very risky to invest in foreign countries. The suggestion here is that it may be safe bet to invest in bonds that is issued by the US Government. For best results, when a bond reaches maturity, reinvest it into another bond.

To invest in bonds, visit Scottrade.com

My time is up....stay tune for more. Happy investing!

PS: Always investigate before you invest!