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Investment Products > Fixed Income |
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Bonds are debt issued by corporations and governments throughout the world.
When you purchase a bond, you are loaning money to the issuer, who in turn,
pays you interest for the use of your capital. Bond markets most often rise
when stocks are out of favor. Find out how bonds can potentially add value to your investments
and provide current income stream.
Convertible Bonds
A convertible bond is a bond which can be converted into a company's common stock. Convertible bonds can potentially provide a substantial additional profit opportunity for investors. Use these resources to get more information on convertible bonds. A convertible bond is a bond that gives the holder the right to "convert" or exchange the par amount of the bond for common shares of the issuer at some fixed ratio during a particular period. As bonds, they have some characteristics of fixed income securities. Their conversion feature also gives them features of equity securities.
Corporate Bonds
Selling bonds is one of the major sources of capital for large corporations. Companies such as as Coca-Cola and General Electric borrow money from individual shareholders, in-turn, paying them interest for the life of the "loan". If you are interested in investing in these corporate bonds, this should be the first place you look for information. Corporate bonds
are subject to market fluctuation and may be worth less than the original cost upon redemption.
EE Savings Bonds
Series EE savings bonds are guaranteed by the United States government, pay interest based on current market rates, and can be cashed in any time after six months. In addition, series
EE bonds are exempt from state and local tax, and in cases where they are used to pay college expenses, from Federal taxes as well. US Government securities are guaranteed as timely payment of principal and interest only as
these guarantees cannot eliminate market risk.
HH Savings Bonds
Series HH savings bonds are current-income securities. Unlike the EE bond, the HH bond itself doesn’t increase in value. When an HH bond is issued, you pay the face amount for the HH bond and interest is paid each six months, providing you with “current income.” The interest payments on HH bonds are made by direct deposit to your checking or savings account at a financial institution.
Junk Bonds
Junk Bonds are high yield bonds issued by companies that are considered highly speculative because of risk of default. Due to their higher risk level, most investors should asses their risk tolerance prior to making an investment decision regarding junk bonds.
Municipal Bonds
Tax-free municipal bonds can be an attractive and safe investment. Municipal bonds, or Munis for short, are bonds issued by city, county, or state governments for a variety of projects such as building schools, expanding highways, or constructing a new sewage system. Municipal bonds are normally exempt from state and local taxes, making them an attractive investment to men and women in the middle to higher tax brackets. Municipal bonds are federally Tax-Free, but may be subject to state and local taxes, and may be subject to the alternative minimum tax.
Certificates of Deposit
A Certificate of Deposit, or CD, is a savings certificate entitling the bearer
to receive interest. A CD bears a maturity date, a specified fixed interest rate
and can be issued in any denomination. CDs are generally issued by commercial
banks and are insured by the FDIC. The term of a CD generally ranges from one
month to five years.
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Advisory Services, Asset Management and Securities Offered Through LPL Financial, member FINRA/SIPC
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