Business & Personal Finance INVESTING. Bonds When you buy bonds you are lending money to a federal...
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Transcript of Business & Personal Finance INVESTING. Bonds When you buy bonds you are lending money to a federal...
![Page 1: Business & Personal Finance INVESTING. Bonds When you buy bonds you are lending money to a federal or state agency, municipality or other issuer, like.](https://reader036.fdocuments.in/reader036/viewer/2022062500/56649eb35503460f94bbacdc/html5/thumbnails/1.jpg)
Business & Personal Finance
INVESTING
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BondsWhen you buy bonds you are lending money
to a federal or state agency, municipality or other issuer, like a corporation.
A bond is like an IOU. The issuer promises to pay a stated rate of interest during the life of the bond and repay the entire face value of the bond when it reaches maturity.
The interest a bond pays is based primarily on the credit quality of the issuer and current interest rates.
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Types of Bonds
Savings Bonds: Government issued and government backed.
Treasury bonds, bills and notes: The bonds the U.S. Treasury issues are sold to pay for an array of government activities and are backed by the full faith and credit of the federal government.
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Treasury Bonds: Securities with terms more than 10 years. Interest is paid semi-annually.
Treasury Bills: Short-term securities with maturities of 3 months, 6 months or 1 year.
Treasury Notes: Interest-bearing securities with maturities ranging from 2 to 10 years. Interest payments are made every 6 months.
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StocksStock: Owning
part of a company.
Stockholder: The owner of the share(s) of stock
Dividend: An income distribution by a corporation to its shareholders usually made quarterly.
Stock Appreciation: An increase in the value of stock in a company, generally based on its ability to make money and pay a dividend.
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Mutual Funds
Established to invest many
people’s money in many firms. A
mutual fund spreads across numerous companies rather
than relying on just one to perform well.
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OTHER INVESTMENTS
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Individual Retirement Accounts
Lets you build wealth and retirement security.
Grows tax free until you are ready to retire and withdraw it.
IRA
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401k Plans
Offered by companies to their
employee’s. Participants
authorize a certain percentage of their before-tax salary to be deducted
from their paycheck and put
into a 401(k).