Bonds can be a basic part of your financial plan to invest and grow wealth. If you are just beginning to consider investing in bonds, we provide you the resources to educate yourself about bonds and the securities market.

What is a Bond? A bond is a debt security, which is essentially the same as an I.O.U. When you buy a bond, you are lending money to a government, municipality, corporation, federal agency or other entity which is known as the issuer. In return for that money, the issuer provides you with a bond in which it promises to pay a specified rate of interest during the life of the bond and to repay the face value of the bond, also known as the principal, when the bond matures, or comes due. Bonds are also known as bills, notes, debt securities, or debt obligations.

There are many different types of bonds that you can invest in. These include: United States government securities, municipal bonds, corporate bonds, mortgage securities, asset-backed securities, federal agency securities and foreign government bonds.

Why should you consider investing in Bonds? Financial advisors often recommend that investors have a diversified investment portfolio which is made up of stocks, bonds, and cash in different percentages depending upon your objectives.

In many cases, bonds pay you interest semiannually, which provides you with a predictable income. You should consider investing in bonds for the expected interest income and to preserve your capital investment. Knowing the role that bonds can have in your diversified investment portfolio is important for planning your retirement. Over the past decade, the traditional benefit retirement plans, known as pensions, have been replace by contribution programs like IRAs, and 401(k) plans. These other retirement options provide you with a wide range of investment options and you as an investor need to be self-reliant when planning for your retirement.

Whether your objectives include securing your retirement income, saving for a new home, or planning for you children's college education, investing in bonds may help you meet your financial objectives.

Types of Bonds - If you decide to invest in bonds, you will need to know the different types of bonds that are available. The bond market can offer investors more choices than the stock market.

Knowing your objectives, risk tolerance, and your tax situation, you can select from corporate bonds, government bonds, municipal bonds, international bonds, and asset-backed securities or mortgage-backed securities. Each bond market provides you with securities with different credit ratings, issuers, coupon rates, yields, and maturities. Each bond market provides you with a different set of risks and rewards.