A bond is a debt security, similar to an I.O.U. When you purchase a bond, you are lending money to a government (Gilts), municipality, corporation (Corporate Bonds), or other entity known as an issuer. In return for that money, the issuer provides you with a bond in which it promises to pay a specified rate of interest during the life of the bond and to repay the face value of the bond (the principal) when it matures, or comes due.
Many personal financial advisors recommend that investors maintain a diversified investment portfolio consisting of bonds, stocks and cash in varying percentages, depending upon individual circumstances and objectives.
Typically, bonds pay interest semi-annually, which means they can provide a predictable income stream. Many people invest in bonds for that expected interest income and also to preserve their capital investment.
Understanding the role bonds play in a diversified investment portfolio is especially important for retirement planning.
Whatever the purpose – saving for your children’s college education or a new home, increasing retirement income or any of a number of other financial goals – investing in bonds may help you achieve your objectives.
Your investment advisor can help explain the investment options available, taking into account your income needs and your tolerance for risk.
Holborn advisers are also qualified to explain the different types of bonds such as Corporate Bonds, Gilts and Junk Bonds and can help you explore bonds as part of a wider investment portfolio.
To find out more, contact a Qualified Holborn Assets Adviser today.