BONDS - Basics

Well if you’re excited about shares, then bonds are something a little boring to the person who would love to trade his money during the swings in the market.But speaking technically, it’s safer to keep a part of your investments in bonds.So what are bonds exactly? When a person starts a company, he requires a large amount of capital and this large amount of sum cannot be obtained from a bank.So what the company can do is that they can issue bonds to the public and people can buy those bonds at predetermined rates. The organization that issues a bond is called a issuer and the person who invests money is called an investor.The advantage of getting a bond is that its similar to a loan issued to the institution. The institution in turn has to pay the investor some predetermined interest. This concept is slower especially when the market goes up and down and there is large scope of improvement when there is higher profit on investments in shares. There is a disadvantage too – If the company goes on loss or bankruptcy then there is no guarantee that a investor would get back his money. So when you are investing in stock/bonds make a smart decision before investment.