May 20, 2010

Invest Safely with Government Bonds


Investing is so important in this day and age. It might seem like with the crash of the stock market in the early 21st century that investing is not a smart option, but really it comes down to being smart about how you invest. Some investments are riskier than others, and if you're worried, then look for investments that are more secure. Typically these types of investments do not yield the same as riskier investments, but you'll still gain more from them than you would keeping them in your bank account or under your mattress.

One secure investment is with government bonds. In the United States, you can buy government bonds that mature anywhere from a month to 30 years. Short-term bonds are called Treasury Bills and you can buy bonds of this type that mature between one month and one year. On this type of bond, you will not get any interest payments before the bond matures.

A longer bond, and probably the most common bond purchased today, is the Treasury Note. These bonds can take as long as 10 months to mature. They must be purchased in denominations of $1,000. These bonds pay out coupon payments, or interest, every 6 months and then the principal is paid back when the bond matures. But the longest bond is a Treasury Bond, which matures between 20 and 30 years. Coupon payments are distributed every 6 months with these bonds as well.

A fourth type of bond is a municipal bond, which is issued by the government to fund for special projects. These bonds are issued on the state, county, or city level and the interest is exempt from federal taxes, which is a bonus with these types of bonds.

But no matter what type of bond you choose to invest in, be sure to hire a bond manager, who can help you keep track of bonds and get the most out of your investment.

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