The world of stock trading can be very complex and even intimidating, and there’s some justification to these feelings. This is a world of finance that deals in sizable amounts of money, and it can be gained or lost on just one critical trade. For some, that’s part of the allure of the stock market, while for others, that’s the very reason that it’s a form of trading to avoid.
But then there are bonds, which are often thought of as the less “sexy,” less interesting form of trading, because this is a kind of trading that is better suited to people with an eye for the long haul. Bonds aren’t purchases of shares in a company. Bonds are a “loan request” issued by a company, wishing to somehow improve or expand its operations. When you buy a bond, you are, in fact, providing a loan to the company, which means that not only are they promising to pay you back this money someday, they will do so with interest.
For many, this is a slow, steady race for investment, compared to the hourly victories or defeats that occur in stock or currency trading. But for the people with more patience and a willingness to strategize over a long period of time, bonds can pay off quite handsomely. Different companies are always offering different bonds, with varying yields, interest rates and maturity dates. Here are the ones you should be keeping an eye on this year and the next.
An ETF is an Exchange Traded Fund, which is a form of investment fund. An investment fund is a “group investment,” where many investors come together, pooling their money for a much larger available financial resource, and then give that money to an expert fund manager who then buys multiple stocks and bonds, for a diversified package, that has a much higher chance to yield profits. The reason for this is the diversification; a fund with a mix of different stocks and bonds has a better chance of having some of that group of investments succeed, rather than “betting it all” on just one stock or bond.
One example of a very good ETF for people that are looking to start bond investment in a safe manner is the SPDR Barclays Long Term Corporate Bond ETF. This ETF, as the name shows, is classified as a long term bond ETF, which generally means 10 years or more to maturity, though some bonds, such as government bonds, can take up to 30 years to mature.
The SPDR Barclays ETF was created in 2009, and it focuses on various investment grade, long term corporate bonds within the US, which is generally considered one of the stronger countries in terms of bonds with good yields and reliability. This is considered a pretty safe investment for people that are looking for reasonable gains with relatively low risk. Needless to say, you can’t be in any kind of hurry if you’re interested in this kind of ETF.
Best Technology Corporate Bond
While the company name “Alphabet Inc” might not be familiar to many people, the actual parent company that is responsible for the creation of Alphabet should be instantly recognizable to anyone that’s used a computer in the last 15 years; Google.
In 2011, Google finally issued its first bonds, in three, five and 10 year terms. When it first did this, the orders for bonds exceeded US$10 billion. Then it did it again in 2014. Today, of course, Google has spun off its company interests into different groups, collectively known as “Alphabet.” But the reason that Google bonds are enticing is because the company itself is, for the moment, “too big to fail.”
As a technology company, Google/Alphabet is doing very well for itself, with no financial dangers in its immediate future. It continues to diversify as a company, exploiting its dominance of the Internet as the primary search engine, providing useful “big data” for many different research purposes thanks to the analytics it gets from Internet use and continues to expand its interests into other areas like self-driving cars and high-speed fiber Internet connections.
Best Retail Bond
Physical retail continues to waffle with uncertainty, that’s all due to one undeniable force; Amazon. Amazon bonds have a variety of maturity dates, from three years, all the way up to 40 years. They issued their first bond in 1998, when they were still relatively new, and at that time is was classified as a “Junk” bond. Then they did it again in 2012, but by that time, no one thought the company was junk anymore.
Amazon continues to grow, expanding its corporate headquarters, improving its delivery infrastructure across many countries, and innovating in business, with new, experimental techniques like drone delivery, which can drop off an order in less than 30 minutes. Where other retail companies flounder, Amazon continues to grow.
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