Saving is not the only way to keep the funds you own. There are options that are more effective and even beneficial to your finances, namely through investment. There are various types of investments that you can use, one of which bonds. Visit http://www.lasvegasbailbondsnow.com/ for full information about bail bond services.
What is a Bond?
Bonds are long-term loans with maturities of 5 to 20 years issued by companies, central government or local governments with a nominal value. With this investment, it means you as the owner of a loan to an institution that later the money and interest will be returned on the due date that has been determined. The longer the bonds time, the more the benefits will also be gained.
Profits from bonds are higher than stock investments, savings, and time deposits, ranging from 8.75-9.25 percent, with fixed interest rates. Naturally if investors are more glance at this investment, the interest earned is quite large. Then how the payment system interest? Here’s the discussion.
Interest Payment System
There are two types of interest payment systems:
- Coupon Bonds
Coupon Bond or coupon bonds are bonds that are paid periodically, such as quarterly, semester or yearly. Usually, on bonds there is a tear able part, this is called a coupon bond, which means every 1 coupon defines the amount of interest that can be taken on a certain period.
- No Coupon Bonds
Bond without coupon or 0 coupon Bond is the interest that will be given to the borrower at the time of purchase of the bonds.
For example, you as a financier buy Bond without coupon for Rp.10 million with 10% interest set. So, you only pay Rp.9 million at the time of purchase. And when the due date arrives, the principal will be fully paid by the indebted party, in this case the company, amounting to Rp.10 million.
If, your stock investment can guarantee it by owning the right as one of the right holders of the company. Then, what about bond guarantees? There are five types of guarantees, namely:
Collateral is an agreement that if the issuer can’t pay the nominal value at the maturity date of the issuer, then they will provide a number of assets owned by the company as collateral. This will strengthen the level of investor confidence that they will not lose.
Others with collateral that guarantee with certain assets to make investors believe with the issued bonds. Debenture will guarantee it with the company’s liquidity level. So the more liquid the company, the greater the level of investor confidence to get interest and the nominal value of bonds, because they can achieve profit from the amount of funds lent.
- Subordinate Debenture
Subordinate debenture is a bond guarantee with a high level of risk. This guarantee will only benefit one party, due to a contractual agreement about who will be paid in advance if the company goes bankrupt.
- Income Bonds
This type of bond does not guarantee the financier with certain assets and the issuer’s company has no obligation to pay interest periodically. They will only pay interest if the company’s profit can reach a certain value, so it is enough to pay interest. So, if it does not reach a certain target, the issuer of this bond has no obligation to pay interest.
- Mortgage Bonds
A mortgage or mortgage bond is a type of guarantee that will plunder the land or building owned by the issuer of the bond as collateral. So, if the company neglects its promise, then the collateral can be sold to cover the liabilities to the investors.
Mortgage bonds will clearly state what collateral to use if it can’t pay off interest and face value on maturity.