Investments: Characteristics Of
Bonds
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Bonds are debt - an obligation to repay borrowed money with a specified amount of interest. Bonds are generally paid off at a specific date in the future spelled out in the bond instrument.
Income from bonds issued by certain entities may be tax free.
You can purchase bonds individually, or through a mutual fund. You can buy U.S. Treasury Bills, Notes, Bonds TIPS (Treasury Inflation-protected securities) and Savings Bonds online through the U.S. Treasury at www.treasurydirect.gov
When purchasing bonds, consider:
- The financial condition of the issuer.
- The issuer's history with respect to payment of bonds and other obligations.
- The term until repayment.
- The interest rate and other relevant terms.
You can find information about bonds in the same sources for information about stocks noted above.
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