“Price is what you pay. Value is what you get”

Warren Buffett 

 

Introduction

So guys we are back again with another interesting topic which is What are Bonds and Types of Bonds. 

I’m pretty sure that we all have been in a conversation where we’ve heard words thrown around like What are bonds or  Types of Bonds. But having next to no idea about it, we just sit there like a dumb person feeling out of conversation. But don’t worry if you haven’t heard about it, we are going to cover the topic from A to Z. So stay tuned and read the article till the end for the complete information.

This article is exclusively dedicated to Bonds.  We will learn everything about Bonds and different Types of bonds, why company issues bonds, and I’m pretty sure that at the end of the article you will be able to choose a perfect bond according to your need.

If you are interested in knowing the Meaning and Types of Investment then visit 👉 Meaning of Investment and Types of Investment.

what are bonds and types of bonds

 

What are Bonds?

Bonds are fixed interest instrument, suitable for the investor who want low risk and fixed return. Returns are usually low because of the Low-Risk Low Return formula. They are considered the safest type of investment because, at the time of bankruptcy or windup, the company pays to Bondholders after bank loan. Bonds are issued to the general public when a company wants to pay off its debt (debt of higher interest rate) or have plans of expansion. These are the main reasons for issuing bonds.

Bonds(What are Bonds and Types of Bonds)

There are different types of Bonds –

 

Types of Bonds

There are different types of bonds, the company issues these bonds according to their need and investors also choose which suits them the most.

Here we have different types of bonds which are listed below –

 

Secured Bonds

Secured Bonds as the name justify, are the type of bonds that are secured or landed against some security. Secured bonds are only issued when there is collateral security (assets) available against the loan. So at the time of the bankruptcy, it is easy to recover the investor’s money by selling that security. They generally have a lower interest rate as compared to unsecured bonds but it is also a safer option for investment.

 

Unsecured bonds

Unsecured bonds are bonds that are issued without any collateral security (assets) against investment. Unsecured Bonds are preferred by the organization which cannot afford to provide any collateral against the money which it is borrowing so they have to pay a higher interest rate as risk increases i.e. it is considered as a good investment option for those who are ready to take higher risk for a higher return.

 

Cumulative bonds

In Cumulative Bonds, interest is paid at the end of the maturity period along with the principal amount (initial investment)  interest will be compounded half-yearly, but it will be credited at the end of the maturity period. This is a good option for those who have a lump-sum amount of money for investment. They can invest some amount in Cumulative Bonds. But here is the catch –   You will not get any money from this investment till the maturity period, a good choice for long-term investment. Don’t invest in this if you don’t have a deep pocket because your money will be locked and withdrawal will lose your all gains.

 

Non-Cumulative bonds

In Non Cumulative Bonds, interest is paid half-yearly to investors, and the principal is paid off at the end of the maturity period. Interest will be calculated as simple interest. This can be a good option for the people who want a source of income while they have invested their money as it pays interest every 6 months.

 

Redeemable Bonds

Redeemable bonds are issued for a fixed maturity period of time, after that, you can’t carry them forward. This is a good option for people who have extra money with them and want to invest for a fixed time frame. They can go with this as it provides higher interest rates as compared to a savings account.

 

Irredeemable Bonds

Irredeemable bonds are bonds that lack a call feature or a right of redemption, also refers to as a perpetual bond. In an Irredeemable bond, once you invest in a company or organization it will never be redeemed at full value, and till that you are going to enjoy interest on your money. It is a very rigid form of investment. Irredeemable bonds are not allowed in India.

 

Registered Bonds

Registered Bonds are issued with the name of the investor on the physical bond. Registered bonds are more secured as changing the name is mandatory at the time of sells and it can’t be transferred without an authorized person’s will and on another hand, it is not that flexible to transfer bonds from one person to another.

 

Bearer

Bearer bonds are bonds that do not require to transfer of a name from the seller to buyers. Bearer bonds are easy to transfer from one person to another.

 

Fixed Interest Bonds

Fixed interest bonds, as the name justify, means that at the time when bonds were issued, both the investor and organization have decided on a fixed percentage of interest which is going to last till maturity. They have fixed interest so can be treated as a constant income source. There is less risk as irrespective of companies profit you are going to be paid.

 

Floating Interest Bonds

In Floating Interest bonds, the interest keeps fluctuating according to the market conditions. In floater Interest bonds, companies promise to give interest like X% over benchmark interest rate to its investors, LIBOR (London Inter-Bank Offer Rate) is an international benchmark rate, and SBI MCLR for India. This interest rate will vary on the market so if you want to take a little risk while playing safe then yes this bond is for you.

floating interest bonds(What are Bonds and Types of Bonds)

 

Conclusion

Bonds are one of the safest types of investment one can make but with low return and risk. It will definitely provide you higher returns than bank FD’s. There are a lot of Types of Bonds you can choose from according to understanding and need.

So this was all the basic information we wanted to share with you guys on What are Bonds and Types of Bonds.

Now, all we want from you is to be a little kind and share our article with people you want to see growing and glowing in all their smart finance managing skills. Just like you 😉

 

What are Bonds?

Bonds are fixed interest instrument, suitable for the investor who want low risk and fixed return. Returns are usually low because of the Low-Risk Low Return formula.

What are different types of Bonds?

1. Secured Bonds
2. Unsecured bonds
3. Cumulative bonds
4. Non-Cumulative bonds
5. Redeemable Bonds
6. Irredeemable Bonds
7. Registered Bonds
8. Bearer Bonds
9. Fixed Interest Bonds
10. Floating Interest Bonds
11. Callable Bonds
12. Puttable Bonds
13. Zero-Coupon Bonds
14. Premium Bonds
 

Spread the love

63 thoughts on “14 Different Types of Bonds”

  1. Hi, i believe that i saw you visited my site so i came to “return the choose”.I’m attempting to in finding issues to improve my website!I assume its adequate to make use of some of your ideas!!

  2. It is perfect time to make some plans for the future and it’s time to be happy.
    I have read this post and if I could I want to suggest you few interesting things
    or advice. Maybe you can write next articles referring to this article.
    I desire to read even more things about it!

  3. I simply couldn’t depart your web site before suggesting that I extremely loved the usual
    information a person supply in your visitors?
    Is going to be again steadily to investigate cross-check new
    posts

  4. Thanks for your publication. I also believe laptop computers are getting to be more and more popular right now, and now tend to be the only sort of computer utilised in a household. The reason is that at the same time they are becoming more and more economical, their working power keeps growing to the point where there’re as strong as desktop out of just a few years back.

  5. I just couldn’t go away your site before suggesting that I extremely loved the usual information an individual
    supply to your visitors? Is gonna be back ceaselessly in order to check up on new posts

  6. It is appropriate time to make some plans for the long run and it’s time to be happy.

    I have read this post and if I may I desire to suggest you few
    interesting things or advice. Perhaps you can write subsequent articles regarding this article.
    I want to read more things approximately it!

  7. Hey would you mind letting me know which hosting company you’re working with?
    I’ve loaded your blog in 3 different web browsers and I must
    say this blog loads a lot quicker then most. Can you recommend a good hosting provider at a reasonable price?

    Kudos, I appreciate it!

  8. Nice post. I was checking constantly this blog and I am inspired!

    Very useful information specially the closing phase 🙂 I deal with such info much.
    I used to be seeking this particular info for a very lengthy time.

    Thanks and best of luck.

  9. It is perfect time to make some plans for the longer term and it is time to
    be happy. I have read this post and if I could I desire to counsel you few interesting issues or advice.

    Perhaps you could write subsequent articles regarding this article.
    I want to read more issues approximately it!

  10. It is appropriate time to make some plans for the future and it’s time to be happy.

    I have read this post and if I could I desire to suggest you few interesting
    things or tips. Perhaps you can write next articles referring to this article.
    I desire to read even more things about it!

  11. Hello would you mind sharing which blog platform you’re using?
    I’m going to start my own blog in the near future but I’m having a hard
    time choosing between BlogEngine/Wordpress/B2evolution and Drupal.

    The reason I ask is because your design and style seems
    different then most blogs and I’m looking for something completely unique.
    P.S Apologies for being off-topic but I had to ask!

  12. I’ve been exploring for a little bit for any high quality articles or blog posts
    on this sort of area . Exploring in Yahoo I at last
    stumbled upon this web site. Reading this information So i’m glad to exhibit that I have an incredibly excellent
    uncanny feeling I discovered just what I needed. I so much indubitably will make sure to don?t disregard this web site and give it a glance regularly. http://herreramedical.org/prednisone

  13. It is perfect time to make some plans for
    the long run and it is time to be happy. I have read this put up and if I may just I desire to
    recommend you some attention-grabbing issues or advice. Perhaps you could write subsequent articles referring to this article.
    I desire to learn even more issues about it!

  14. I’ve been browsing online more than 4 hours today, yet I never found
    any interesting article like yours. It’s pretty worth enough for me.
    In my view, if all web owners and bloggers made good content as you did, the web will
    be much more useful than ever before.

  15. Greetings! I’ve been reading your blog for some time now and finally got the bravery
    to go ahead and give you a shout out from Houston Texas!
    Just wanted to tell you keep up the fantastic job!

  16. I have been browsing online greater than three hours lately, but
    I by no means found any attention-grabbing article like yours.
    It is lovely price enough for me. Personally, if
    all website owners and bloggers made excellent content material as you did, the internet will be much more helpful than ever before.

  17. Youre so amazing! I do not mean Ive review anything such as this prior to. So wonderful to locate somebody with some initial thoughts on this subject. realy thanks for beginning this up. this website is something that is required on the internet, a person with a little originality. useful job for bringing something brand-new to the internet!

  18. It is the best time to make a few plans for the longer
    term and it’s time to be happy. I’ve learn this submit and if I may just
    I desire to counsel you some interesting issues or suggestions.

    Perhaps you could write next articles relating to this article.
    I desire to learn even more issues approximately it!

  19. Youre so amazing! I do not mean Ive review anything such as this prior to. So wonderful to locate somebody with some initial thoughts on this subject. realy thanks for beginning this up. this website is something that is required on the internet, a person with a little originality. useful job for bringing something brand-new to the internet!

  20. I loved as much as you will receive carried out right
    here. The sketch is attractive, your authored
    subject matter stylish. nonetheless, you command
    get got an impatience over that you wish be delivering the following.
    unwell unquestionably come further formerly again since exactly the same nearly a lot often inside case you shield this hike.

Leave a Reply

Your email address will not be published. Required fields are marked *

what are bonds and types of bonds