Investment in the debt market is provided a good return in comparison to
the other sector of the investment and also the liquidity of the debt
market is higher than the other sector.
Why the debt market is more preferred ,because the return on the debt
market is good, liquidity of the return is maximum in comparison to
other investment (In equity or some shares return allocated to the
investors after payment to the debt lender and after all expenses ) .If
there is any Break Even situation when there is no profit or no loss
than the equity or the other share holder not getting any return for
there investment but the debt bond holder will get there interest and
the interest on the debt bound is much higher than the investment on
share or deposit in any banks.
From the owner point of view also the debt bond is good as the interest
on the debt bond is calculated on the profit before tax, and it's
treated as expenses.
Debt bond will not create the problem of ownership change by the more issue of the debt bonds.
Govt. also issue debt bonds in the market to collect the money to
fulfill the gap of Fiscal deficit (Deficit arise when the govt. invest
more amount on the different development project but the revenue arise
from tax or different means is less than the actual expenses)
Goverment Bonds first purchased by the nationalized banks or institution but
in the present situation these bonds are purchased by the general
public also .Govt. debt bonds are more secure return, interest rate on
it is higher than general interest rate prevailing in the market,
investment in the Govt. debt bonds is more secure than the other
investment as this bonds are backing by the Govt.
As per the estimate the total debt bond market is $82.2 trillion US debt bonds are $31.2 trillion.
US is the larges economy in the world and it's also a bigger debtor too.
After the second war influence of the US dollar arise in the whole
world market and the dollar assume as valuable currency and the US Govt.
bonds assume as the secure means of investment .
US dollar used to pay the petroleum to the Middle East courtiers , and
these countries again invest this income to purchase the US security
bonds gold bonds, that means the dollar again return to there home land.
All Asian, Europen and African countries invest there reserve in the US
bonds.
Now the question arises if the US is the largest economy in the world
than why the US Govt. needs to collect funds by issuing the bonds in the
market. US is the big economy but on the other hand US is the only
single larger importer in the world .from the second world war to till
mid 90s the development of the whole world economy depends on the US
export, US import the 1/3 part of the total import of consumer goods,
use of the petroleum products, electricity, consumer durable goods
highest in the US, and for this the US import increases and the US govt.
has only two option first devalue the dollar or second collect the
money by issuing t5he bonds in the open market .First one is dangerous
situation because the devaluation not effect the US only it effect the
whole worlds economy as the US dollar used as the global currency for
the exchange therefore every country maintain the Dollar reserve and the
devaluation reduce the market value of their reserve.
After 90s the scenario change little bit the Middle East countries now
not invest there whole reserve on the US bonds they now invest on the
Euro bonds and the Bonds issued by the Indian and China .European and
other countries import now not depend on the US economy, the emerging
economy in the world China, India, Brazil and Russia now consume the
large part of the world import.
It doesn't mean the US dollar importance totally fade up from world economy but
Yes the US bonds importance reduce in the economic world.
About the author:
Ronand
Smith is a financial post writer written different post for the
financial sites; visit his site to get the different finance related
information.
Saturday, September 29, 2018
Tuesday, September 11, 2018
Bonds and Interest
Though bonds are one of the more common investment tools that are
traded on the securities market today, there are many people who aren't
sure exactly how it is that bonds work. If you've found yourself
wondering exactly how bonds are created, how you can buy them or make
money with them, and whether investing in bonds is right for you and
your financial needs, then this article is for you.
The information presented below will give you a better insight into what bonds are and how you can work with them, so that you can decide whether or not they are the right investment for you.
The Creation of Bonds
Unlike stocks, which are portions of company ownership that is sold on the securities market, bonds are created by companies and branches of government. Ownership of bonds is very much like owning a certificate of deposit, which makes sense because bonds operate in a very similar manner. When bonds are created and released for sale to the public, a date of maturity is established… the bond will continue to collect interest until that date of maturity, at which point the full value of the bond will be payable to the bond owners.
Buying Bonds
Bonds can be purchased in much the same manner that shares of stock or other securities are. Operating through an investment broker or online brokerage company, an individual can purchase individual shares of a specific bond at any point before that bond's maturity. Ideally, you want to purchase shares of a bond early in the bond's lifespan… in other words, you want to buy it soon after its creation so that you won't have to pay as much for it and the final value of it will result in higher profits for you.
Interest Rates
The rates that specific bonds pay can vary depending upon the term of the bond, the company or government office that created the bond, and the prevailing interest rates at the time that the bond was created. Though many people look for bonds with high rates, it can also be profitable to purchase a bond with a lower rate that has a longer term than some of the high-rate ones.
Maturity
When bonds are created, the date that they reach maturity is set. Often, this will be between six and twelve months, though the actual time that it takes the bond to reach maturity depends upon the creator of the bond. Before investing in bonds, it's important that you take the time to research the bonds that you're considering so that you can find the ones that have the longest amount of time remaining until their maturity so that you can make the largest profit that you can from your investment.
Keeping Bonds in Your Portfolio
Since bonds increase in value as time goes by, the longer you own shares in a specific bond then the more profit you're likely to gain from it. You should keep in mind, though, that the older a bond gets the closer it's getting to its maturity, so it's important to keep an eye out for new bonds to invest in so that your investment portfolio is constantly growing.
Though it may seem like a lot of investments to keep track of at first, you need to remember that as the bonds reach maturity they will be paid out to you and will no longer be making a profit.
About the author
John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the www.directonlineloans.co.uk website.
The information presented below will give you a better insight into what bonds are and how you can work with them, so that you can decide whether or not they are the right investment for you.
The Creation of Bonds
Unlike stocks, which are portions of company ownership that is sold on the securities market, bonds are created by companies and branches of government. Ownership of bonds is very much like owning a certificate of deposit, which makes sense because bonds operate in a very similar manner. When bonds are created and released for sale to the public, a date of maturity is established… the bond will continue to collect interest until that date of maturity, at which point the full value of the bond will be payable to the bond owners.
Buying Bonds
Bonds can be purchased in much the same manner that shares of stock or other securities are. Operating through an investment broker or online brokerage company, an individual can purchase individual shares of a specific bond at any point before that bond's maturity. Ideally, you want to purchase shares of a bond early in the bond's lifespan… in other words, you want to buy it soon after its creation so that you won't have to pay as much for it and the final value of it will result in higher profits for you.
Interest Rates
The rates that specific bonds pay can vary depending upon the term of the bond, the company or government office that created the bond, and the prevailing interest rates at the time that the bond was created. Though many people look for bonds with high rates, it can also be profitable to purchase a bond with a lower rate that has a longer term than some of the high-rate ones.
Maturity
When bonds are created, the date that they reach maturity is set. Often, this will be between six and twelve months, though the actual time that it takes the bond to reach maturity depends upon the creator of the bond. Before investing in bonds, it's important that you take the time to research the bonds that you're considering so that you can find the ones that have the longest amount of time remaining until their maturity so that you can make the largest profit that you can from your investment.
Keeping Bonds in Your Portfolio
Since bonds increase in value as time goes by, the longer you own shares in a specific bond then the more profit you're likely to gain from it. You should keep in mind, though, that the older a bond gets the closer it's getting to its maturity, so it's important to keep an eye out for new bonds to invest in so that your investment portfolio is constantly growing.
Though it may seem like a lot of investments to keep track of at first, you need to remember that as the bonds reach maturity they will be paid out to you and will no longer be making a profit.
About the author
John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the www.directonlineloans.co.uk website.
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