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Personal Finance Terms 101: Bonds


 

Bond With Bonds

Are personal finance terms too much for you to handle? All those complicated terms seem to be turning off from finance. Well, you came to the right place! We’re here to break it down for you as we explain bonds in the simplest of terms.

So, what is a bond? A bond is basically an IOU. The bank is loaning you money, you are paying them interest, and at the end of the deal the bank is getting their money back.

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That’s what a bond really is. You can get a bond from the federal government, like a savings bond or a treasury bond. You can get a bond from a big corporation called a corporate bond. Or, you can even get a bond from a state like New York and those are called municipal bonds.

However, the reason someone invests in bonds is because they are more conservative than the stock market, they tend to be more predictable, and produce more money than a cash investment!

So why invest in a bond? Well, it’s a great way to diversify your money so you are not taking too much risk like in the stock market. So, take a look at your investment portfolio. Are your investments diversified? Are you not investing enough?

Do your investments carry too many risks? These are all great questions you need to be asking yourself! Make a change in your investment today and follow the basics like bonds!

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