Beginner Investing

Bonds with the government or companies

Bonds are fundamentally loans to governments, organizations and companies. Bonds come in many forms but generally are of a fixed term with penalties if you need to withdraw money early. There are many types of bonds (government bonds are called gilts) varying from generally 5% to 7% interest per year.

Bonds are generally a low risk investment. Government bonds being virtually 100% safe, how likely is it that the government will go bankrupt or fall into serious financial difficulties? All other organizations and business offering bonds will carry a small risk depending upon their credit worthiness. However it is not often the well established company will fall into serious financial difficulties but it does happen very occasionally. The interest rate offered with the bonds will generally reflect the credit worthiness of the organization / business i.e. the lower the credit rating the higher the interest rate offered.

However Investing in bonds can be a bewildering business. Bonds come in a baffling variety of forms and finding one that's suitable for you can be tricky. Also there is always the danger of the bond being miss sold so read the small print carefully to ensure that you understand any penalty clauses prior to purchase.

If you feel that bonds maybe of interest to you and be the type of investment you are looking for then to learn more we recommend you visit the following web site www.moneyweek.com – Money Week is a journal and their web site can give a good insight into bonds, explaining the types of bonds, pitfalls, history, recommendations etc.