How To Make A Hefty Profit From Investing In Bonds

Most people know that bonds can be a safe place to invest but if you know what you are doing you can get returns competitive with stocks. Here are some things to keep in mind when investing in bonds:

What is the most profitable type of bond?

Government bonds include Federal, provincial and municipal bonds. Federal bonds are considered the safest so they generally have the lowest return. Provincial bonds pay better than Federal bonds and Municipal bonds pay the best interest rate. I don't know how much safety you need but consider how unsafe municipal bonds would be when they are issued by a major city...In North America I'd say it is pretty safe to invest in any city. If you are used to buying federal government bonds, this is a quick and easy way to increase your returns.

Foreign bonds offer another lucrative opportunity you may not have considered. Some countries offer fixed interest returns for bonds that are better than many equity mutual funds. Risk factors include political and economic forces as well as relative currency fluctuations. If the political and economic climate is stable you can make good money if the value of the currency issuing the bonds is increasing relative to your own currency. Political and economic instability makes it difficult to predict how the rates will be affected by world events so it is best to shy away from countries that are not stable.

How to buy a profitable bond:

Buying a bond is not a straight forward decision. The actual rate of return you get can vary with the price you paid, face value, coupon rate, months to maturity and market rate when you sell. Calculations can get pretty complicated if you want to factor in all the variables. This calculator will help you simplify the decision by giving you numbers, charts and graphs to compare the value of one purchase with another. http://www.calcbuilder.com/cgi-bin/calcs/BON15.cgi/FinanCenter

Pay particular attention to the term of the bond. Short-term bonds mature in 1-3 years, medium term bonds mature in 3-7 years. Long-term bonds mature in 7 or more years. The longer the term the more money you stand to make or lose quickly. Small changes in interest rates can make a big difference in the market value of your bonds. This game is for alert investors who are willing to do the research and make quick decisions. This calculator will help you figure out the best time to sell: http://www.calcbuilder.com/cgi-bin/calcs/BON3.cgi/FinanCenter .

A special opportunity for the alert investor:

Convertible bonds offer another little known opportunity. You can buy into the safety of a bond and if and when market conditions are right you can convert them into stocks for a hefty profit. This calculator will help you decide whether it is worth converting the bond: http://www.tradersclub.com/traderstools/calculators/investment.shtml

Another simple, secure investment:

These strategies are for people who are willing to put in the time and effort to make the most of their investment. If you are one of the many people who are so tied up in your own business that you don't have the time or energy to do justice to a proper bond investment strategy you may consider Living Legacy's Inc. They offer a solid, guaranteed investment with returns up to 54% over five years. For more information call 1-877-269-0950 or download the information package from: http://www.netman-ecommerce-guru.com/life1 .