Benefits of Investing into Bonds - PowerPoint PPT Presentation

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Benefits of Investing into Bonds

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Here I tried to tell the benefits of investing into bonds and what type of bonds are there. – PowerPoint PPT presentation

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Title: Benefits of Investing into Bonds


1
Benefit Of Investing Into Bonds
  • Date 06/17/2022

2
What is a Bond?
  • In simple terms, a bond is loan from an investor
    to a borrower such as a company or government.
    The borrower uses the money to fund its
    operations, and the investor receives interest on
    the investment. The market value of a bond can
    change over time.
  • A bond is a fixed-income instrument, which is one
    of the three main asset classes, or groups of
    similar investments, frequently used in
    investing.

3
How do bonds work?
  • Bonds work by paying back a regular amount to the
    investor, also known as a coupon rate, and are
    thus referred to as a type of fixed-income
    security. For example, a 10,000 bond with a
    10-year maturity date and a coupon rate of 5
    would pay 500 a year for a decade, after which
    the original 10,000 face value of the bond is
    paid back to the investor.

4
Types of Bonds
  • U.S. Treasury bonds - Treasury bonds are backed
    by the federal government and are considered one
    of the safest types of investments. The flip side
    of these bonds is their low interest rates.
  • Corporate bonds - Companies can issue corporate
    bonds when they need to raise money.
  • Municipal bonds - Municipal bonds, also called
    munis, are issued by states, cities, counties and
    other nonfederal government entities.

5
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  • Gold Bonds Gold Bonds are substitute for
    holding physical gold Investors have to pay the
    issue price in cash and the bonds will be
    redeemed in cash on maturity.

6
Benefits
  • Bonds help diversify the investment portfolio. A
    well-established principle of personal finance is
    that one should never keep all the eggs in one
    basket and adding Bonds to your investment kitty
    helps you achieve just that. Through
    diversification, you can minimise your risks in
    the event your other investments start performing
    poorly. This is one of the primary benefits of
    Bonds.
  • Compared to other instruments, Bonds offer
    assured returns. They are relatively inelastic to
    the market fluctuations.

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  • Bonds are like a contract between the issuing
    company and the investors. The companies are
    bound to repay the interest and the principal
    amount of the Bond. Moreover, bondholders are
    considered creditors of the company and get
    preference for debt repayment if any bankruptcy
    proceeds against the issuing company.
  • THANK YOU
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