Use this tag for questions that relate to debt instruments known as bonds. Generally, money is lent to governments or corporations that is paid back with interest.

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Are bonds taxed every year or only at maturity

If I buy a bond that matures in 2 years, do i pay taxes only when i get my principal and interest back at maturity? Or do i pay some taxes on year1 and rest on year2?
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56 views

When a bond is called back by issuer, do i still get the interest, or only the principal back

If i buy a one year callable bond at par, with yield to maturity = 3%, and if the bond gets called after a month, then do i still get approx 3%/4= 0.75% interest when the bond is called back? Or can ...
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1answer
36 views

Is there a way to avoid short-term capital gains taxes on bond funds?

It appears that most bond ETFs pay out monthly distributions from interest earnings. Is there a way to directly reinvesting the earnings on the fund without triggering a taxable event? Are there any ...
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2answers
60 views

Does it make sense to invest in bonds when interest rates are likely to rise? [closed]

Thinking about a possible increase in interest rates in the future, does it make sense to invest in bonds? Would the price of a bond fund holding mostly AAA rated Fannie/Freddie issues, and medium ...
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1answer
68 views

should i cash some twenty year old EE savings bonds?

I have, let's say, $20,000 in series EE savings bonds, issued in 1995. As I understand it they were purchased for half their face value ($10,000) and have now matured to their full value since it's ...
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4answers
123 views

Over the long term, why invest in bonds?

Over the long term, stocks have historically beaten bond returns, even after accounting for the periodic market crashes. The general consensus is that your portfolio should at least be 25% in bonds. ...
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1answer
48 views

Are Bond funds a good idea [closed]

How should one mitigate losses of last week? I am concerned but tend to move to quickly
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1answer
23 views

Amortizing bond premiums for corporate bonds?

I know you can amortize bond premiums on your US tax return. You can keep deducting the amortized amount every year till maturity. However, if you decide to sell the bond before maturity and have been ...
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1answer
20 views

How do I know what is the current market interest rate for bonds?

It's said in books and articles that when the "interest rate" rises, the price of bonds becomes lesser, and vice versa. Intuitively, this is reasonable since bonds with higher interest rates are ...
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2answers
87 views

Why buy bonds when GICs offer better interest

As an individual investor, AAA rated bonds and even AA rated bonds provide much lower interest rates than a conventional GIC from a reputed institution backed by CDIC. So who would ever want to buy a ...
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1answer
283 views

What happens to the bond ETF when the underlying bond matures

When a bond matures, what happens to the corresponding bond ETF? It still keeps on going as if nothing has happened. How does this work? I guess there is some kind of rolling over happening here, but ...
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0answers
26 views

Bonds semi-annual market rate [duplicate]

Let's say you have a bond that pays semi-annually with a 10% coupon rate. Each half-year you pay 5% of the principal. Let's say the market rate is 12%. How come to calculate bond price, we discount ...
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2answers
110 views

Is there any real purpose in purchasing bonds?

I am new to investing, for the most part, and I have learned a decent amount about how bonds work. What I wish to know more of is simple: Is there any real profit to it, and is it worth it? From the ...
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1answer
42 views

Understanding payment options with NS&I Bonds

So, just like many, my parents want to invest in: http://www.nsandi.com/65-guaranteed-growth-bonds?ccd=NALBAA since they are supposed to be quite good however, there is a genuine fear that the money ...
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0answers
48 views

best way to keep track of your portfolio, total income / loss for both equities, funds and bonds

Is there any recommended web based tool which allows you to keep track of your investment portfolio, be it equities, funds, or bonds? In the case of bonds, and equities which pay a dividend, I would ...
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2answers
49 views

Net Cash Flows from Selling the Bond and Investing

I am a beginner finance student, i am having trouble understanding short sale.In this context the bond is priced at 960.00 and will give a future payment of 1000 1 yr from the day it was bought. I ...
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1answer
101 views

How to compare goverment bonds to generic money market position?

I know that the bonds are higher risk investment so I'd like to compare the bond funds/ETFs with the market sweep offered by account to decide on proper mix. However I'm confused of how to read ETF ...
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1answer
39 views

Calculating the Price of a Bond

Would someone be able to help me understand if I am doing this calculation for some homework correctly? I know I could do it on my calculator, but I'm trying to understand the process behind it as ...
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3answers
70 views

Does pursuing the highest yields or pursuing the lowest ones give better returns in the long run?

Consider two people (Alice and Bob) who have some money each month to save and invest in government bonds of their own country (because they want it to be liquid, and have the smallest risk of ...
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2answers
183 views

Ready to invest but I'm overwhelmed with the number of brokers and services

I have £15,000 - £20,000 to invest for the long term and I've researched what I will regularly invest in to: Pension, Index funds, Bonds, small number of individual stocks (maybe) as well as my cash ...
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2answers
54 views

Different avenues of tangible returns from index funds and bond funds

I am a beginner investor and I've been out of school at this point having saved enough to seriously look at where I am investing my money. I have decided to start off with a portfolio that is ...
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1answer
68 views

Rationale behind discount bonds?

I'm trying to understand if my rationale behind discount bonds is correct. Let's say Company X issues a 2 year $1000 bond at 5%, market interest rate is 10%. Because the coupon rate < the market ...
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2answers
119 views

What happens to bonds values when interest rates rise? [duplicate]

I want to invest 10% of my portfolio into bonds. The other 90% will go into stock. I took a look at Government Bonds which TD Ameritrade offers at a $5000.00 minimum. This is a little over my ...
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1answer
49 views

What factors should I consider in picking a bond?

I have invested in stocks previously but realized that it isn't for me, at least for now. I have been researching on other options as to where I should invest my money and I found myself looking into ...
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5answers
3k views

If I buy bonds near the maturity date, is it a short term zero risk investment?

Right now I'm studying how bonds work and from what I have studied, the crucial thing about bonds is the maturity date, where you are assured you'll get the principal if you sell at that time, and the ...
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1answer
37 views

US corporate bonds index

Does a US corporate bonds index exist? It should be free to access or accessible through Bloomberg or Reuters terminals.
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2answers
164 views

Is there a reason to buy a 0% yield bond?

Right now I can get a 1yr government bond that yields 0%. Is there any reason to buy such a bond? E.G. If the broker holding my accounts goes out of business is my "perceived low risk portion" of my ...
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1answer
106 views

Can a bond's market price rise above its lifetime value?

I'm just learning about bonds, reading an introductory book about investing in German. Please correct me if terms are wrong, and if this question can be improved. Consider a bond: Lifetime: 3 years ...
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1answer
86 views

Why YTM is higher than current yield in discount bond

I learned that in discount bond, coupon rate < current yield < YTM and the relationship will always hold. I can figure out why coupon rate < current yield. But just cannot don't ...
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1answer
186 views

Warren Buffett and Charles Munger advice for small investors?

The investment philosophy at Berkshire Hathaway is well known: Buy great businesses that are run by great people and keep them 'forever'. However, I believe Buffett/Munger have said that 'Buy and Hold ...
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1answer
67 views

How should I allocate short-term assets in a rising-interest rate environment?

I'm looking to rebalance my portfolio and move some of my stock investments into lower-risk investments, largely because I want to use some of it in the not-too-distant future (say 2-3 years). How ...
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3answers
2k views

What traditionally happens to bonds when the stock market crashes?

If the stock market crashes 20%, do bonds suffer or is there little to no correlation between the two markets?
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1answer
27 views

Shares in stock exchange and dividend payout relationship

If a company announces 22% dividend and face value of its share is Rs. 5/- what would be the payout amount for 1000 shares held by person?
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2answers
158 views

How should I be investing in bonds as part of a diversified portfolio?

I often hear that I should diversify my investment portfolio with X% stocks and Y% bonds, ostensibly to mitigate the risk. My question is what exactly this guidance means in terms of HOW to invest ...
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1answer
97 views

Why does the price of the floating rate bonds return to par after coupon payment?

Hungary just issued a bond that matures in 2024, pays once a year and has the coupon rate of "1-year treasury bill rate" + 2.5%. I searched for information on the net how does market sets price on ...
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3answers
143 views

Bonds vs equities: crash theory

Let's presume a market crash is coming sometime within 6 months to a year. Theoretically speaking, would it be wise to reallocate my index fund, which is presently about 80 % stocks and 20% bonds, to ...
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4answers
161 views

Is it good idea to sacrifice some capital for higher income?

Let's assume I hold a bond that yields 3% for some time. Based on my calculations $100 are working in the investment. So it makes me $3 each year. Now let's assume the yields have been increased so ...
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1answer
41 views

How does the price of expiring bonds expected to change?

There are some old bonds here in Hungary that currently sells at 111% of face value and after taxes they have 5,1% coupon yield. They have 3 years left. If I keep it till maturity, the YTM is only ...
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1answer
45 views

How far into a Defined Maturity Bond Fund does it stop making sense?

Some here have suggested instead of Individual Bonds I should look for Bond Funds. I've looked into Guggenheim BulletShares and Fidelity Defined Maturity Funds. What I'm not clear on is the timeline ...
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1answer
59 views

How does Value get rounded in figuring out Bonds Value?

I was reading up on Bonds here on About.com Why Do Bond Prices and Yields Move in Opposite Directions? In the second example it offers: In this example, the opposite scenario occurs. The same ...
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1answer
47 views

What to know before purchasing Individual Bonds?

What are the different factors and terms one should be acquainted with before investing in individual bonds? I'm currently looking at: It's all rather foreign to me though. When I look at this page ...
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2answers
94 views

Treasury bills, how do they work?

I am looking at Bills tab on the site: http://www.treasurydirect.gov/instit/annceresult/annceresult.htm There is a 4-week security term with what appears to be a 4-week maturity date, with ...
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1answer
172 views

Where to buy good corporate/goverment/treasury bonds?

I am non american citizen. I read a portion of Benjamin Grahams, "The Intelligent Investor" he suggests that one should always have a portion of ones savings in bonds. Specifically, he mentions SERIES ...
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2answers
139 views

What is the risk to a high-yield corporate bond fund versus an investment-grade corporate bond fund?

The yield for HYG, a high-yield (i.e. junk) corporate bond ETF, is currently 5.72% versus 3.56% for LQD, an investment-grade corporate bond ETF. Of course, higher yield generally means higher risk. ...
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2answers
67 views

Why are real-term bond yields systematically declining, and what does it mean for investors?

I'm having hard time understanding what is causing the trend below: In theory, since it is inflation adjusted I'd expect the yield to fluctuate with the economic cycle, but not systematically drift ...
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1answer
301 views

Why do both stock and bond seem overvalued in 2014?

The general wisdom is that when stock is overvalued, bond is undervalued, and vice versa. Why are both suggested to be in a bubble in 2014? Also, if one believes in tactical allocation, what asset ...
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1answer
81 views

Why aren't muni bond yields driven to the point of indifference?

Why is there any point to munis? By that I mean, why aren't yields driven down to be equal to the after-tax yields of taxable bonds of similar maturities and credit quality? Obviously they are ...
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20 views

Learning Resources For Eurobonds

Please suggest me some books/articles about eurobonds which answer such questions as: what is it, how it works, what are the risks, what are the advantages and so on.
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1answer
94 views

What are the risks to using a tax-free bond fund for short term savings (1-2 years)?

I'm saving some money, probably for a down payment house, and I'd like it to earn a bit more return than it would just sitting in cash. I max out my Roth 401(k) and my Roth IRA, so any additional ...
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1answer
1k views

Why are US treasury bonds priced in 32nds?

What is the historical reason for treasury bonds to be priced in 32nds? I have tried using Google and this site to find the answer, but have not been able to find anything definite. Three ...