Investments {bond, investment}| can be company or government promises to pay a fixed interest rate after a date or up to a date, when investors can get principal back. Commercial-paper certificates can state that debtor agrees to pay amount on date. Bonds typically have higher interest rates than savings accounts.
government
USA government bonds are E, H, savings, treasury, and municipal bonds.
process
Bonds are sold for different amounts, and company pays back principal and interest to holder over time, typically quarterly.
tax
Income from bonds from cities {municipal bond} is free from federal and state tax. Income from bonds from states is free from federal tax.
market
People buy and sell bonds in a market {bond market}. Bonds vary in value compared to other investments, depending on interest rates in other investments, money value, and time to maturity. Investment in securities has little risk. Investment costs little to buy and sell. Invested money is typically readily available. People can buy into bond mutual funds.
Corporations can issue unsecured long-term bonds {debenture}|.
Bonds pay off at different times {maturity}|, such as 3, 6, or 9 months, or 1, 2, 5, 10, 20, 30, or 40 years.
regular insurance payment or regular bond payout {premium}|.
United States government sells bonds through banks {savings bond}| {U.S. Savings Bond}. Savings bonds sell at a percentage of face value and have a fixed period during which they can earn interest. For example, savings bond sold for $750 are worth $1000 in 30 years. If bond sells to someone else before 30 years, market determines interest. If you redeem bond after 30 years, value is $1000. Savings bonds typically have higher interest rates than savings accounts.
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Date Modified: 2022.0225