Finding the best fixed Rate Bonds

Jun 10 11:17 2011 Carl S Liver Print This Article

 

Many people are turning to fixed rate bonds in the modern marketplace because they offer many advantages over traditional savings accounts and,Guest Posting more importantly, stocks. Unlike stocks, such bonds have a very fixed yield and are, in most respects, as good as the cash used to purchase them. Bonds are affected only by macroeconomic factors such as the rise and fall of currencies and the economy as a whole, and as such they offer a very safe investment in turbulent times. They are also backed by the full faith and credit of either the lending institution or the Crown, ensuring that they will retain their value regardless of market crashes, rampant inflation or large scale economic collapse.

Fixed rate bonds have repayment rates which are set upon purchase and do not change over the life of the bond. This is in contrast to variable-rate bonds, whose rates change over time in sync with lending rates, inflation, or various investments. Because bonds with fixed rates tend to need to be forward-thinking and predictive in nature, they have lower rates of interest than variable-rate bonds most of the time. However, they are steady, safe and consistent, making them excellent investments for persons with long-term plans such as home-ownership or retirement.

Selecting the best bond is largely a matter of finding the best interest rate. Since most bonds with fixed rates will mature slowly, even a fraction of a percent can result in hundreds or thousands of pounds in increased yield. Additionally, most of these bonds are insured or otherwise backed up by outside means, a potential bond buyer is free to purchase bonds from almost any bank without fear that such bonds will become worthless in the event of a run on the bank or a bankruptcy.

Therefore, anyone wishing to invest in bonds should scour the internet to find the best bonds available. Most bonds are offered by the government, although some cities and even major corporations will offer bonds for sale as a means of securing capital for future investments. The vast majority of consumer bonds, however, are available through banks, who will of course take a cut in exchange for being a broker and for providing additional security. The size and amount of cut they take directly affects the interest rate that they offer to the end consumer, so shopping around for the best rate, especially via internet comparisons, is the best way to ensure that one gets the best rate possible. Additionally, many banks offer higher-yielding bonds in exchange for larger investments, favoring those who purchase a large number of bonds at once as opposed to those who purchase them piecemeal. However, those who wish to lock in their savings with bonds are encouraged to do so by repeatedly buying small denomination bonds.

 

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Carl S Liver
Carl S Liver

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