Concept in Definition ABC

It is called bond to a title issued by a State, a government local, a municipality or a company in order to get into debt. It may also be the case that the bond issuer is an organization not linked to any nation, such as the world Bank, you want to get money from the financial markets. In all cases, interest is added to the refund of the amount.

There are different types of bonds: perpetual debt bonds, that never return the nominal amount but that continuously generate interest; redeemable vouchers, which can be exchanged for existing actions; convertible bonds, which give the holder the possibility of exchanging them for newly issued shares and which offer a cost effectiveness lower than what they would have without this possibility of change; state bonus, which are those issued by a sovereign state; zero coupon bonds, which never pay interest during their existence, but only at the end, when the nominal amount is returned; bonds called "strips" that allows the principal payment to be negotiated separately from the interest payment;

“junk” bonds they have a lot risk, but they offer high performance.

In general, financial advisers recommend owning a diversified portfolio that contains bonds to your credit. The advantage of owning bonds is that it is known exactly how much money is going to be delivered at the end of the investment. Thus, it is possible to save with these for a future education of the children or for a retreat from the world labor. To fulfill these purposes, it is necessary to take into account a series of criteria such as the maturation of the bonds (the time in which they will be paid), their interests, tax rates (some have advantages in this regard), etc.

There are many ways to invest in bonds; one of the most common is entering bond funds. If you intend to know how to choose between the variety that is presented, the most important thing is to have a good financial advisor to trust and who explains the different possibilities.

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