Connect with us

How To

How to Invest in Bonds?

How to Invest in Bonds?

Investing the right way at the right time is crucial to secure the future, including a financially sound retirement. The financial market features numerous options to invest your money in. Which investment tool you choose depends on your income, risk appetite, your financial goals and several other factors. Let’s dive into the pool of bonds; a potent investment vehicle and, understand its underlying facts.

What is a Bond?

A bond is a loan made by an investor to the Government or business for a specific period with the condition to receive the amount with interest. Bonds are asset class that help balance investment portfolios and reduce the risk of market fall.

How do Bonds Work?

Bonds are paid out regularly over a fixed period can, are called coupon rate. They are fixed-income securities that pay a fixed interest for a specified period and, in the end, the principal amount is paid back to the investor.

A bond’s coupon rate is determined by the creditworthiness of the issuer and maturity period.

How are Bonds Different from Stocks?

Stocks signify a specific share of ownership in a company where the stockholder receives the proportionate amount of that company’s earnings. Whereas, bonds are the debt obligation of a business or a Government entity on an investor.

Bonds are safer than stocks that earn lower interest in comparison since stock markets are usually volatile.

It’s great to invest in stocks during the formative years of the portfolio. However, as the retirement phase starts setting in, bonds are the safer option.

A glaring drawback of bonds is the possibility of the borrower going bankrupt before paying off the debt.

Before investing in bonds, its critical to understand the key things.

Important things about Bonds

Government bonds are usually considered the safest investment option

Bonds coming from state and local Government called treasury are the safest since they are backed by complete faith. Standardised rating agencies rate the bonds. The higher the rating, the lower the possibility of default by the borrower.

A bond’s interest rate is directly proportionate to the creditworthiness of the issuer

The Federal Government is less risky and hence, Treasurys offer low-interest rate. Other companies may offer higher returns due to the increased risk of default.

The period of the bonds matters in the long run

Bonds, though sold for a fixed term, can be sold in the secondary market before maturity. However, the principal amount is affected. Hence, in simple terms, bonds that are held for longer periods guarantee higher interest rates plus the face value of the bond.

The market value decreases when interest rates rise

Higher interest rates higher coupon rates of new bonds. This reduces the resale value of older bonds with lower interest rates.

If you have decided to invest in bonds, there are some prerequisites to consider before going all out.

Know where to buy Bonds

Approach a broker

An online broker is one of the most common places to buy bonds. Its where you can find investors looking to sell bonds. You also stand a chance of enjoying a discount while buying from an underlying investment bank.

Check out the exchange-traded fund

The exchange-traded company purchases bonds from several organizations including short, medium and long-term bonds. Buying through a fund is great since you don’t have to buy in large sums of money.

Directly from the Federal Government

Purchasing from the Federal Government doesn’t include any fee since there is no broker or middleman involved.

Tips for Investing in Bonds

Here are some important tips to consider before investing in bonds:

Don’t go for yields blindly

Higher yields are often offered by bonds with poor credit qualities that only focus only on gains. Be patient when interest rates are low and never forget that higher yields come with higher risks.

Be clear about your objectives

Your objectives can range from children’s education to planning for holidays to luxurious retirement. Prioritize your objectives and plan your investments accordingly.

Know your risk appetite

You should never invest in a bond just because it looks lucrative. Various bonds have different risk profiles. Know the risks involved completely before investing.

Keep a track of your investment and progress

You should constantly update yourself with the latest trends in investing and apply them in your investment portfolio. Reading articles on bond investment and watching financial news serves the purpose.

Read the prospectus and terms & conditions thoroughly

Note that all Government bond funds are not Government bonds. There are individual bonds that have a prospectus, discussing fee and other important details.

Know the previous trade price of the bond

You will clearly know the bond’s liquidity and its competitiveness. Remember, that a bond that is not liquid is usually not traded for some time.

Talk to and know your brokers

Consider multiple brokers and discuss your objectives, including your risk tolerance with them. Also, know their credentials before deciding on one.

Clearly understand all the costs involved

Know the compensation involved, the commissions, any mark-ups and mark-downs and other costs associated with a bond before finalising one.

Consider reinvesting your coupons

Choose a coupon account to save money received from coupons and enjoy the benefits of compounding. However, in case of a bond fund, the fund takes care of this.

Don’t time the market

Don’t assume interest rates without firm evidence. Refer the past data but, never make assumptions based on the same. Follow a specific investment strategy to achieve your financial goals.

Check if the borrower can pay the bonds

Study a company’s history, past financials and other records thoroughly before investing. You can make a detailed estimate of whether the company can successfully meet its debt obligations.

What is the right time to buy bonds?

A bond’s interest rate is set and is made available to investors in the debt market. The fluctuating interest rates decide how the bond performs in the market. And, bond prices move countercyclically with interest rates. You need to take these factors into account and time your investment professionally.

Which bonds are right to invest in?

You should take several factors like your risk tolerance, income, tax situations and others into account before buying a bond. Major bonds include Federal Government bonds, municipal bonds, corporate bonds and high-yield bonds.

Let’s discuss these types of bonds in detail.

Types of Bonds

Federal Government Bonds

These are the safest bonds issued by the Federal Government. Their interest rate is very low, and they don’t pay cash interest. However, you can purchase them for a discount on the face value and sell for the actual face value.

Municipal Bonds

These bonds, issued by the state and local Government, are the lowest-yielding bonds. However, these bonds are non-taxable and, the after-tax yield varies from state to state.

Corporate Bonds

Rating agencies rate companies and, those with good to excellent credit rating issue these bonds. Hence, they are considered a safe investment and, pay low-interest rates compared to poorly rated bonds.

High-Yield Bonds

They are also known as junk bonds and, they pay higher interests due to the high risk they carry.

Variety of Bonds

Zero-coupon Bonds

They don’t pay coupon payments and, they offer discount on face value and can be sold at the full-face value.

Convertible Bonds

The bondholders can convert the debt into stock based on some conditions. In case of conversion, the company need not pay any interest of the principal amount of the bond.

Callable Bond

This bond can be called off by the issuing company before maturity. This usually happens when the company’s credit rating improves or in case the interest rates decline. For this reason, callable bond is riskier for a bond buyer.

Puttable Bond

This is the reverse of callable bond. Here the bondholder can sell or put back bonds in the company before maturity. This happens when the interest rates rise and hold more value to the bondholders.

Bonds in Relation to the Economy

We already know that bonds offer a fixed payment in the form of interest for the specified period. Bonds are particularly an attractive investment vehicle when the economy and the stock markets are low.

Stock markets, when doing well and paying higher interests, cause a drop in the value of bonds. In this scenario, it becomes a challenge for borrowers to attract purchasers by offering higher interest payments. This means bonds are inversely proportional to the performance of the economy.

It’s worth mentioning that a wise investor should never time the market. This means all bonds should not be sold even during peak market times. In fact, it’s the perfect time to invest more in bonds to counter a possible market fall.

You should always diversify your portfolio with bonds, stocks and other assets like gold and real estate to enjoy the highest returns with the least risk. Investors will accept low yields during the low phase of the economy to safeguard their money. They can issue bonds with low-interest rates and, still, sell all the bonds.

In fact, by diversifying your portfolio, your loss from one entity is negligible and virtually risk-free.

Bonds influence the position of the economy with their fluctuating interest rates. Lower interest rates on bonds lower the cost of living. It enables low mortgage rates where you can buy your dream property for a low price.

How To

Guest Posting

Guest Posting 1

The internet has set up brands at every corner of the street and getting people to visit yours is a mix of skill and art. The attempts to layout customer roadmaps to your brand which aren’t abandoned are not new and the struggles are the same as before. In fact, the struggle to have your brand heard has piled up as competition keeps emerging and viewer attention span keeps getting fragmented. This has led to a surge in brands using conventional advertisements to highly compress their message to the audience.

This is not the best gameplan to bet on. Ads are perceived by many as intrusive, insincere and housing an ulterior motive. The audience is bombarded with ads from every angle and making it shorter does not really help. Most people don’t react the same way to guest posting.

A guest post is a piece of brand journalism which lives on a publisher’s website. Sponsored posts are an advertorial piece of long-form writing that is created to be highly engaging. They avoid the intrusive and abrupt conventional-approach of ads and indulge in a more respectful and subtle modern-approach for recommending your services or products.

Choosing the right platforms to publish your guest post is crucial as the platform is seen as your partner and representative. Your chosen platform must balance between writing a blog post and a traditional advertisement, stray away from being intrusive and stick with being subtle and respectful. At Global Banking and Finance (GBAF), we offer the opportunity to bank on our decade-long experience and expertise in writing balanced content like this.

How Can Guest Posts on GBAF Help You?

Constantly investing time and effort into writing and publishing on your blog is great for fostering and strengthening your already existing audience relationship but this doesn’t help you reach a new audience.

Guest posting opportunities on our platform gives you access to an untapped audience base. This is a significant advantage in two ways:

  • Familiarity: We have built our audience through our authentic, thought-provoking and storytelling writing nature. Our audience is familiar and receptive to this writing style. When we adapt your content in the same format, it allows your content to have better reception compared to traditional ads. Also, your content will adapt to the environment of content which makes it feel natural and less abrupt or intrusive.
  • Trust: When a consumer learns about your brand through someone they trust (someone like a renowned brand, friend, some industry authority, etc), they are more likely to trust you, too. Our audience’s trust means a chance for your brand’s voice to be heard. It also means having customers who have completed their journey of brand choice. When they choose you, it will be an additional choice of transition from our platform rather than a new choice of approaching you. They only have to go half-way.

With amplified brand reach and redefined trust, your brand visibility and credibility will be boosted. We also help you boost visibility by leveraging our social media channels which currently have 135k followers and keep growing every day.

Another major area of impact when doing guest posts with GBAF is the focus, delivery and expertise of writing. The audience members will engage with your content much more than they do with your traditional ads. This will increase the chances of convincing the customers who doubt, skepticize and speculate becoming customers of your brand from afar. Writing to deliver your promotion with value-driven content also allows you to plug in a recommendation at a crucial point of the problem with your brand as the solution.

Lastly, value-driven content avoids the intrusive BUY THIS! style of writing. Here, the focus is on communicating your knowledge and therefore allows you to establish yourself as a thought-leader in your niche.

All of these combined benefits act as a catalyst to boost your brand reach, funnel attention to your brand, gain a competitive advantage and knock down all other challenges presented in separating yourself from your competition.

Final Thoughts

Brand adoption is slow. Abandoning an old familiar brand route for a new one is difficult. People rarely reach out to brands and they sprint the other way if they see brands reach out to them through conventional and dull ads. In such a deadlock scenario guest posts can provide the perfect strategy to bet on.

Continue Reading

How To

Why Guest Posting is Your Best Bet

Why Guest Posting is Your Best Bet 2

In a scenario where new businesses are popping up everyday, one of the major challenges brands face is that of devising an organic and effective way to get the attention of their target audience. And one of the first solutions that comes to mind is the internet and consecutively, digital marketing. Even though its all-pervasive nature has made it both super-easy to reach people across the globe, the internet also comes with its own set of challenges. In this article, we will discuss the tough-to-crack parts of digital marketing, things that almost every brand representative or marketing executive has to face in the present date.

The oversimplification of digital communication has deceived many brands into believing that it’s the only way to reach their audience. However, the reality is hardly so. Today, there are more platforms and media formats than there have ever been before and newer ones keep emerging everyday. As a result, the netizens have developed a rapidly decreasing attention span. As a result, brands are wrestling to fit their message into as tiny a space as possible in what can only be called conventional methods of advertising.

For many brands, digital marketing proves to be an ordeal that takes years to crack, all the while draining the brand’s potential for more business and/or larger reach. It is worth noting that one of the major challenges that most businesses face is that of people avoiding ads altogether; no matter how good your ad is, chances are that people don’t want to see it, resulting in zero engagement. The second and bigger challenge is that short messages don’t convert those who are unaware of your brand, to brand loyalists. Instead, these ads are likely to affect only those who are already considering buying into what your brand is offering, which might be a small share.

This is where Global Banking & Finance Review (GBAF) comes in. We offer you the opportunity to overcome both the challenges (and more) in one go through our guest post services.

Guest Posts Have An Edge Over Normative Advertisements

Guest posts are advertorial pieces of long-form writing, created with an aim to engage the audience by taking away the impression of normative ads. How? Sponsored posting articles are so designed that they address the audience’s demands or queries, and also offer your brand as a solution instead of point-blank marketing. Consequently, this makes the audience spend a longer time engaging with your brand than they would do with, say, a pop-up ad. Through a guest blog post, your brand has the space to engage in a fair exchange because the article delivers value to your audience rather than being a conventional sales-driven advertisement.

To sum it up, sponsored posts fall right on the sweet spot between a blog post and a traditional advertisement on the spectrum of advertising.

Here’s Why You Should Run Guest Posts on GBAF

At GBAF, our team understands the importance of the environment in which your brand is introduced to an audience, something that leaves a lasting impact on their minds. It goes without saying that this very impression will influence and drive their future decisions on whether they want to engage with your brand and buy what you’re selling. Hence, it is our staff that is usually responsible for writing the posts that go up for your brand on our website. This allows for the sponsored post to merge in seamlessly with the existing content in our website instead of sticking out like a sore thumb. The aim in doing so is to create these posts in a way that does not distract or seem abrupt as guest posts are meant to be adaptive to an existing environment. So, even though it is essentially promoting your brand, a sponsored post is more of a brand journalism piece than an ad.

On our platform, we understand the importance readers attach to authenticity and value. This also allows GBAF to have a firm grip on introducing your brand effectively while simultaneously catering to the audience’s needs. Our team works around the clock to gain our audience’s trust by continually delivering authentic and value-driven content to our readers for more than a decade. When you partner with us, that resource pool is easy to tp into. When a consumer learns about your brand through a reliable source (for instance, someone like a renowned brand, friend, some industry authority, etc), they are more likely to trust you, too.

Continue Reading

How To

Why You Need to Take Guest Posting Seriously

Why You Need to Take Guest Posting Seriously 3

When customers are largely in control of marketing conversations, traditional advertisement has lost its touch. How you educate your prospects and out-educate your competitors now win the battle and generate leads.

If you’re the spokesperson of a brand or if it is your job to tell a story that your customers care about, you know how important it is to be generous, to share your ideas on a platform that promotes storytelling, and to position your brand as the most trusted partner for your customers.

The challenge with quick, easy micro-copy is that it fails to make an impact. It’s like a quick-fix that we try to use in everything we do. However, quick-fixes don’t heal a burning pain-point. A thoughtful, easy-to-read, user-friendly guide does.

At Global Banking & Finance Review (GBAF), we help you help your customers. Here’s how.

Guest Posting: How it Works

Guest posting is the art of telling your story to your audience without shoving it down their throats. It’s not an advertisement, but a thought-leadership content piece that educates & promotes your brand to your target audience without interrupting them.

  • Our editorial team works your content piece to present your brand on our website
  • The sponsored articles adhere to the context, the tone, the voice of your brand and represent it in the way you’d like to portray to your audience
  • The content piece is lucidly written and only does one job, i.e. educating your audience
  • The piece is long-form of content that allows your target audience to engage with your brand longer (much more than an advertisement)
  • It doesn’t distract, interrupt, or intrude the audience
  • Sponsored posts are designed and articulated to solve the audience’s pain-point and showcase your brand as a solution-provider

Why Should You Run Guest Posts on GBAF?

GBAF is a platform that garners a community of over 135,000. Here are four reasons for which you should run guest posts on GBAF:

  1. We help you increase the engagement with your audience: We don’t depend on surveys to understand what your target audience wants. For the last ten years, we have been serving various kinds of readers. And we know them personally. Thus, we know how to place your content to increase engagement.
  2. We put your audience ahead of the marketing funnel: When you run an ad, you start from scratch. And as a result, the first step is always to start with the beginning of the marketing funnel. When you publish a guest post on our platform, your target audience already begins to trust you since we’ve put years of work in building the community.
  3. We help you generate leads: An ad is interruptive. When you submit a guest post on GBAF, it teaches instead. And directs the audience to take action. As a result, you generate more leads. In this era of marketing, the brand that educates better, profits more.
  4. We offer you cost-effective solutions: When you run sponsored articles on GBAF, you’re in charge of your budget. You decide how much you’d like to spend per month. And we support you with cost-effective solutions backed up with the results so that you can calculate your ROI upfront.

How to Submit a Guest Post on GBAF

  • Check categories:
  • B2B: CSR, Green Tech, AI & Big Data, Ongoing Training for Employees, Manufacturing
  • B2C: Travel Destinations, Trends on Buying a Home, Working Remotely, Electronics
  • Follow guidelines:
  • Format: Word format
  • Send at: [email protected] (or use this page to submit a guest post)
  • Length: 750 – 1000 words
  • Image: We need an image of the author (specifications: width – 800 px. & heigh – 600 px.) with original credits
  • Additional requirements:
  • Author Bio: Provide an author bio (name, title, affiliation, bio, and contact). You can add a link
  • Profile: Give a brief overview of the company, key information about the company, major projects, certifications, and company logo. Please submit the profile in word format

We review your submission and if it adheres to our submission guidelines and quality standards, we will connect with you before publishing the article.

Continue Reading

Latest Articles

Return to work: Flexibility, preparation and communication are key 4 Return to work: Flexibility, preparation and communication are key 5
Business2 days ago

Return to work: Flexibility, preparation and communication are key

By Matt Weston, Managing Director, Robert Half UK As lockdown restrictions ease for the foreseeable future, conversations across the business...

How sustainable AI improves the triple bottom line 6 How sustainable AI improves the triple bottom line 7
Technology2 days ago

How sustainable AI improves the triple bottom line

An investment in green AI enables financial services firms to align people, profit, and planet By Nick Dale, EVP business...

The impact and implications of Covid-19 on financial reporting 8 The impact and implications of Covid-19 on financial reporting 9
Finance2 days ago

The impact and implications of Covid-19 on financial reporting

By Mark Billington, Regional Director, Greater China & South-East Asia, ICAEW The economic consequences of Covid-19 have been unprecedented, affecting...

Contis enters RBS Capability and Innovation Fund bid seeking £35 million for disruptive SME growth strategy   10 Contis enters RBS Capability and Innovation Fund bid seeking £35 million for disruptive SME growth strategy   11
Business2 days ago

Contis enters RBS Capability and Innovation Fund bid seeking £35 million for disruptive SME growth strategy  

Leading payments provider, Contis, has applied for two grants from the RBS & BCR Alternative Remedies Package, totalling £35 million.   Unlike most applicants who...

Four years of digital transformation in four weeks: UK lockdown puts pressure on brands to digitally deliver 12 Four years of digital transformation in four weeks: UK lockdown puts pressure on brands to digitally deliver 13
Business2 days ago

Four years of digital transformation in four weeks: UK lockdown puts pressure on brands to digitally deliver

Nearly a third (32%) of consumers would switch providers if a brand’s website is unavailable for more than 24 hours...

Demonstrating the value of collaborative leadership during crises 14 Demonstrating the value of collaborative leadership during crises 15
Business3 days ago

Demonstrating the value of collaborative leadership during crises

By Jean Stephens, CEO, RSM International In 2000, a leading expert in behavioural science, Daniel Goleman, outlined the six key...

Empowerment Accelerates Continuous Improvement 16 Empowerment Accelerates Continuous Improvement 17
Business3 days ago

Empowerment Accelerates Continuous Improvement

By Larry Sternberg, JD, Fellow, Talent Plus, Inc. Empowerment First, let me clarify how I am using the word “empowerment”...

What is loneliness and how can you manage it? 18 What is loneliness and how can you manage it? 19
Top Stories3 days ago

What is loneliness and how can you manage it?

By Iris Schaden Your Business and Personal Coach A mere century ago, almost no one lived alone. Today, many do...

How banks can build digital transformation into business continuity 20 How banks can build digital transformation into business continuity 21
Business3 days ago

How banks can build digital transformation into business continuity

By Andrew Warren, Head of Banking & Financial Services, UK&I, Cognizant Businesses around the world are falling victim to the...

Akerton Partners 22 Akerton Partners 23
Finance3 days ago

Akerton Partners

Akerton Partners S.L. is a Spanish independent mid-market corporate finance advisor founded over a decade ago, in 2008, amid a...