Irrespective of what you earn today, you cannot guarantee your financial security without an investment vehicle. People lose jobs, and companies fail with the many failing economies worldwide. Investment does not mean sinking your hard-earned money into any venture touting as the one with the highest returns. You should carefully consider your alternatives to avoid getting fleeced by the many fraudsters nowadays.
It would be best if you got a company offering financial planning services in your area to test your obligations and budget, then suggest the best investment plan for you. The ideal financial planner is unbiased rather than one who will only push certain investments to earn a kickback from the same.
One of the popular alternatives nowadays is an investment bond. This is a loan type you will advance a bond’s issuer. The issuer will then agree to pay you an interest for a specified period. The payment schedule, interest, and face value of your bond are set upfront. Bonds are predictable investment vehicles.
Here are the investment bond alternatives you can choose.
Treasury Bonds
Politicians in most places would rather raise the cash the government needs through treasury bonds rather than increasing taxes. For this, the government will issue treasury bonds. When you opt for a treasury bond, you are loaning cash to the government.
Several alternatives exist for treasury bonds with different characteristics. They are all backed by full faith and credit in the government. It is hard for governments ever to go bankrupt, and thus treasury bonds are primarily risk-free. Even so, their prices fluctuate.
Corporate Bonds
For-profit companies advance these bonds. Though riskier compared to treasury bonds, they compensate for this risk with attractive interest rates. Corporate bonds frequently get called. This means the company changes its mind about the money you are advancing and returns it. This is mostly in instances where the rates are too high for the money to be profitable for the company. As such, corporate bonds are somewhat unpredictable.
Agency Bonds
In these, you will loan your cash to a federal agency. In most cases, the agencies are a cross between a government and a private entity. They are thus among the safest for investing your cash since they rarely go bankrupt or suddenly close shop. The interest rates paid for an agency bond is, however, just slightly higher than that advanced for a treasury bond.
Municipal Bonds
These are used by states, counties, and cities looking for money for their daily operations. Though less risky compared to corporate bonds, municipal bonds are not as secure as agency and treasury bonds. The bonds might also be called before the agreed-upon time frame. As such, you might have the money returned within two years when you have signed for ten years.
For those looking for a mostly predictable option for their investment portfolio, the above bonds are among your best choices. Their interest payments are predictable and can serve as regular income. The bonds will also prove quite beneficial as long-term investments.
