Monday, July 20, 2009

When the Government Wants Your Money and You Profit- Bonds

Your country wants to grow financially.

Sounds good right? You love your country and you want it to grow; after all, this will help you too. But in order for it to grow, it needs money to finance investments. So the governments turn to you in order to take even more of your money than what you already pay, albeit in some cases they actually give it back to you. But you can make money this way too if you decide to obtain a bond. In this case, the money that you make is chiefly the rate of interest from lending your money.

Essentially, if you're looking to make a safe investment than you usually can't get any safer than bonds. In the battle between bonds and stocks, you'll be much safer if you choose to put your money in a bond. There are different kinds of bonds, the safest in Canada being the Canada Savings Bonds. Some bonds, however, can be kind of risky. In fact, if you try to take out the money you already paid before the bond matures (i.e when you can safely get your money back without economic penalty), you could lose quite a bit of money. Plus, you might not get much money back at all if the company goes bankrupt.

How on Earth do I Buy Bonds?
You can buy them at banks, credit unions, trust companies, brokerage firms, the Canada Investment and Savings agency, and online at the Canada Savings Bonds website. Thinking about buying the Canada Savings Bond? You better check your calendar, 'cause they aren't sold all year. Usually you'll find them sold from October until the beginning of April.

Really the best thing that you can do when you're thinking about bonds is to find a trusted personal finance advisor. This person will know how to properly spread out your money by choosing a wide variety of bonds. And make sure you hold onto the bond until it matures. Just remember too that just because they are low risk investments, they are still investments- the very name suggests instability.

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