Improve financial security by making smart Bond Investments

Financial security is a top concern for nearly everyone these days; be sure to make the right choices with bonds

13:11 17 February 2013

All countries tend to work together towards a healthy global economy and the collapse of one country’s economy may, at worst, cause the collapse of other economy, and at best, significantly impact them. People are trying to find ways to make their money work for them. Everyone has heard the old adage, “Work Smarter, Not Harder.” Financial success may require a little bit of both for a while.

If you’re considering investing and think that bonds are the best way to go, you may want to speak with an investment counsellor or do a little research.

In the past, bonds were a great investment. It was like having guaranteed money in the bank, the amount you received depended on how long you retained the bonds before cashing them in. While bonds are technically still a legitimate form of investing, government bonds may not provide the type of stable return you might be seeking.

The U.S. Government is increasingly losing its ability to repay debts which, for our purposes, includes paying out on bonds. First you need to decide if you want to invest over the long-term, or if you’re just looking for a short-term investment with the best rate of return.

If you’re able to invest long term, the typical advice is to put the majority of your money into high-risk investments that have the potential to pay off at much higher rates than the lower-risk alternatives. To ensure you don’t lose everything you’ve worked hard for, it is best to also invest some of your funds in the low-risk, low growth options as well.

Your high-risk investments should be the long-term ones since you can wait for the market to recover before taking out the funds. These types of bonds mature anywhere, from 20 to 30 years after your initial investment. If you need a bit more security than a high-risk investment with only the potential for a high-rate payoff, than you want a more intermediate bond investment.

Those are bonds which typically mature between 5 and 10 years. The safest bonds earn about 2per cent which obviously will not give you a great return. If you want safety and moderate growth, just as in most things in life, you want to choose the middle option rather than the other two extremes.

Look for moderate growth bonds that do not assess sales charges. Also look for bonds with an expense rate of less than a quarter percent per year. These are called No-Load funds. Basically, it means you pay less to get a safer moderate growth bond.