What are bonds and is it safe to invest in them at banks?
mayerj72 asked:
a bond is like a buying a stock, but you are giving the company a loan and not buying a portion of the company (a stock). wells fargo is a company that very down right now. so it is kind of risky but the potential gains are excellent.
Ok a bond is something You buy from the government….you can purchase these at Wells Fargo, but the stability or stock price of wells fargo would have no bearing on the strength of your bond.
There are Two common types, but many others…EE and I…usually people buy EE.
You would by the bond for half the face value…so if you buy a 100 dollar bond you would pay 50 dollars, and the in a certain amount of time, usually 10-20 years the bond matures and you get to redeem it, it stops earning interest at 30 years i think…I’ve cashed out 100 dollar bonds for 140 dollars before.
If I were you I would forget about bonds though, they really don’t earn much, and considering the current rate of inflation is 6% and rising, and bonds earn less than 3% a year, your actually just loosing money slowly…If you want a safer solution than just stocks and something that grows faster than savings accounts and bonds, go for Mutual funds, some risk, but good payout.
A bond is a another type of investment but is considered to be more secure than a normal investment because it is backed by the government. There are other variations of a bond like a gilt.
Investing in a bond is much safer that some other options. Investing in a bank? Take a look at the situation with banks at the moment before you decide to put lots of money away into banks. Remember to do your research before you invest, and analyze the company.