As an entrepreneur or finance personnel, you definitely will want to cut cost and maximise profit. You definitely will also want to ascertain the security of your money invested.
Investing in bonds is a very good way to invest and also to enlarge your portfolio.
Although bonds could be less risky than stock, they pay lesser rewards when compared to it.
Experts say that as you grow old, you should invest more in bonds because its less risky than the other types and the chance may not be available to recover from losses if any occurs
WAYS TO EARN MONEY FROM BONDS
From the above write up, am sure you have a bit of an idea on why bonds are important. Now let’s get to how you can make money through it.
1. EARNING INTEREST THROUGH BONDS
When you buy bonds, you loan money out to a user. The user could be a corporate body or the government
The coupon taye attached to bonds depends on several factors such as the level of interest at that time, the maturity of the bond and the credit rating of the issuer.
Let’s give a example, let’s say you buy a #10000 bond from Pepsi and the interest tate is 7%-, then you should get a #7000 intetest income per year.
If the maturity period for the bond is 20 years in the future, then you will get your original #10000 investment 20 years back from the day it was issued.
2. GENERATE CAPITAL GAINS
Investors need their money befoee their bonds mature so they can sell it to a broker, this could mean two different things, it could me you’ll be experiencing a capital gain or a capital loss.
The result gotten could be as a result of the health of the company.