When a business needs capital, it can borrow money or sell stock.  When a government needs capital, it can raise taxes or borrow money.  Investors who loan money to companies or governments purchase bonds.  Bonds are a promise to pay back the amount borrowed on a specific date and interest until then.  Interest is usually paid semi-annually although other payment schedules are not uncommon.

Zero coupon bonds are issued at a discount but no payments are made until the maturity date.  At maturity, both principal and interest is paid.  The amount paid equals the face amount of the bond.  EE Savings Bonds are an example of a zero coupon bond.

Bonds may be exchanged between investors.  If current interest rates are higher than the bond’s interest rate, the investor may have to sell it at a discount.  Likewise, if interest rates fall, it may be possible to sell it for more than face value.

Your mortgage is similar to a bond: you (the “company”) borrowed money from a bank (the “investor”) and signed a note (the "bond") promising to pay it back, both principal and interest by a specified date.  Further, your mortgage may be sold to another “investor.”

Do you have questions about bonds or other investments?  Feel free to give us a call.  Our contact information is below or click on "Contact Us" to the left.

Investors should carefully consider the investment objectives, risks, charges and expenses. This and other important information is contained in the prospectus, which can be obtained from your investment professional and should be read carefully before investing or sending money. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity.

These views are not to be construed as investment advice.  All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy.  Any economic and performance data is historical and not indicative of future results.  Any market indices discussed are unmanaged.  Investors cannot invest in unmanaged indices.  Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards.  Please consult Harold Templeton, CFP^® for further information (click on "Contact us" above).