10:13 31 January 2013
People who are over 50’s need to be very careful when investing their money. They need to choose investment vehicles that do not come with huge risk so they will not spend their golden years penniless.
One of the best options is debt security. This is generally safer compared to equities but is a little risky compared to cash.
Investors buy bonds from the issuing entity that needs additional funding. This could be the government or private corporations. Bonds simply mean lending your money to this institution in exchange of interest on the maturity date.
Unlike stock trading, debt securities are less volatile. They also offer coupon or yearly interest payments to investors. Bonds can be traded publicly before their maturity date on open market.
People who want to invest in bonds must understand that bonds are typically categorized into two; investment grade and junk bonds.
There are investment rating entities that can help you figure out if the bonds that you would like to buy will most likely to yield higher rates. However, keep in mind that the bigger risk you take in this endeavour, the better your chances of making more money.
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