Business & Personal Finance

INVESTING

BondsWhen you buy bonds you are lending money

to a federal or state agency, municipality or other issuer, like a corporation.

A bond is like an IOU. The issuer promises to pay a stated rate of interest during the life of the bond and repay the entire face value of the bond when it reaches maturity.

The interest a bond pays is based primarily on the credit quality of the issuer and current interest rates.

Types of Bonds

Savings Bonds: Government issued and government backed.

Treasury bonds, bills and notes: The bonds the U.S. Treasury issues are sold to pay for an array of government activities and are backed by the full faith and credit of the federal government.

Treasury Bonds: Securities with terms more than 10 years. Interest is paid semi-annually.

Treasury Bills: Short-term securities with maturities of 3 months, 6 months or 1 year.

Treasury Notes: Interest-bearing securities with maturities ranging from 2 to 10 years. Interest payments are made every 6 months.

StocksStock: Owning

part of a company.

Stockholder: The owner of the share(s) of stock

Dividend: An income distribution by a corporation to its shareholders usually made quarterly.

Stock Appreciation: An increase in the value of stock in a company, generally based on its ability to make money and pay a dividend.

Mutual Funds

Established to invest many

people’s money in many firms. A

mutual fund spreads across numerous companies rather

than relying on just one to perform well.

OTHER INVESTMENTS

Individual Retirement Accounts

Lets you build wealth and retirement security.

Grows tax free until you are ready to retire and withdraw it.

IRA

401k Plans

Offered by companies to their

employee’s. Participants

authorize a certain percentage of their before-tax salary to be deducted

from their paycheck and put

into a 401(k).