As Bonds are considered as the safe portion of all the investment and income portfolios, many people want to invest in bonds or by the bond fund managers those who invest in Bonds.
The main thing that should be taken into consideration is that whether the type of bond chosen to invest and the amount of interest suits your need and whether it can increase the income rate when compared to other types of bonds or other income portfolios.
Although the bond investment requires sophisticated and experienced business strategies, the rules are clear that the investor has to lend the money to the issuers such as Government, company or institution etc and the interest rate that is fixed while investing is returned within the considered duration of time that increases the income rate of investors. Read about how many types of bond funds are there.
Investment in Bonds
The minimum rate of investment is to be well known besides the rate of profits in terms of interest to invest in either the property that has high market value at current or the property with lowest market value. Both the investments may give the equal amount of interest rate depending upon the invested amount.
Bond Fund share and purchase of individual bonds are the two ways to invest in fixed income securities. Many people invest in bonds to increase the capital and also get profit in the income in the form of interest that is consistent. Bonds could be purchased from many sources that are specialized in selling debt securities such as commercial banks, brokers firms etc.
The cost of purchasing a bond i.e. the commission of broker comes generally added to the price of the bond. The cost of investment can range from one percent to five percent of that of the Bond’s Original value.
Minimum investment in Bonds
Although the mutual fund is the effortless way to invest in bonds, they have trade-offs that can be management costs, thus investing in individual bonds is better and that gives you control over the bond portion of your income portfolio.
There are many types of Bonds and the minimum investments in any of them depend on your tax bracket and the type such as treasury, government, Investment Grade corporate based, foreign etc. These invested amounts generally differ near every issuer.
- At the small end, there is US Government Securities and Treasury Security that can be purchased with a minimum amount of $100 increments.
- Bonds of Corporate Bank can be purchased with multiples of $1000.
- Municipal Bonds are usually tax-free and the Bonds of Municipal Debt Securities can be sorted out to purchase for $5,000 increments.
- You can buy Federal Bonds from Treasury Direct website in $1000 increments that too without any type of Commissions and you can pick up the maturities from 13 weeks to 30 years, but the safety of Treasury Securities provides low yields when compared to other types of bonds
In case you purchase individual bonds through a broker, the commission may affect the yield as the amount to be paid to the broker get added to the Bonds