June 4th, 2011 | 
Author: 
Many people turn to bonds because investing in bonds is safe and the returns are normally quite good. There are primarily four different types of bonds and they are sold through the government, corporations, state and local governments, and foreign governments.
The reason why people are attracted to bonds is that they get back their initial investment. This is what makes bonds the perfect investment vehicle for people who are new to investing or for those who have low risk tolerance.
The US Government sells Treasury Bonds through the Department of Treasury. All these bonds have a maturity date ranging from 3 months to 30 years. You can purchase bonds based on the maturity date that you want.
Treasury bonds do not just include bonds. Even Treasury Notes and Treasury Bills come under this category. All types of Treasury bonds sold in the US are backed by the government and you pay taxes only on the interest earned by the bonds.
In the US, even state and local governments are allowed to sell bonds. Unlike federal bonds, these bonds have a higher rate of interest and the reason for this is that these governments can go bankrupt. However, a federal government cannot go bankrupt. Bonds sold by state and local governments are free from income tax.
If you want to invest in foreign bonds make sure you check the country’s political stability because purchasing these bonds is quite risky. However, if you still want to invest in foreign bonds it can be done as a part of a mutual fund.
In order to gain maximum from investing in a bond, make sure you reinvest the money into another after one bond reaches maturity.
Posted in 
Tags: