"The Bond Issuer is a Major Factor"
Don't envy my great retirement -- Join the fun!
This site contains the pieces of the income investing jigsaw puzzle -- now get the Big Picture so you secure your financial future by creating an ever-growing income from investing
One important factor related to bonds is simply, who or what issued the bond?
Many different kinds of entities raise money through issuing bonds.
Who is the bond issuer?
Companies large and small. Local governments and federal government-related agencies. National governments from the United States to Paraguay.
One of the risks of investing in bonds is prepayment risk.
Obviously, one important way to judge prepayment risk is to look at who issued the bond
United States Treasury bonds are considered risk free because the U.S. government has always paid its debts. I'm sure that also applies to the governments of many other developed countries.
So long as governments are committed to paying off their obligations and have the taxing power to do so, they should repay their bonds.
Of course, not all governments around the world have this power. Some of them preside over extremely poor people, most of whom pay little or no taxes because they have little income. Most of these governments have little power to enforce their own tax laws.
Sometimes political factors enter in. I know I've heard at times that the current government of Iraq did not plan to honor debts incurred by Saddam Hussein. That may have changed. In 1998, Russia upset the world by announcing it would not repay Soviet Union-era debt (though it would honor post-Soviet debt.)
Businesses normally intend to pay off their bonds, but of course businesses can have cash flow problems and become unable to pay their bills. Therefore, the quality of the business issuing a bond has a great effect on how risky it is.
Click to watch brief (30 second), exciting video on finding financial freedom through investing for income . . .
Now experience for yourself the joy of securing your retirement through income investing!
Want more income -- now or when you retire? Get your free eCourse:
Learn the Secrets of Investors Who Make Money in Both Bull and Bear Markets . . . Good Times and Bad!
Before the subprime mortgage mess makes stock market goes down more . . . before the stock market goes up, making dividend paying stocks more expensive . . . before the rising cost of gas, gold and food -- and the sinking U.S. dollar -- put the world into a recession . . . before retiring baby boomers start selling off their growth stocks . . . before you need investment income just to eat!
7 Reasons to Invest for Income -- NOW More Than Ever
Rick Stooker
- The greatest secret to income investing (Einstein called it "The most powerful force in the universe")
- What -- historically -- gives stock market investors 1/2 of their total returns (from 1929-1954; 1966-1981; and 1999-mid-2008 it was the ONLY way to make money from the stock market!)
- How to avoid suffering from accounting fraud. Automatically keeps you from throwing you money away on future Enrons, Tycos, and WorldComs
It's easy. Just enter your first name and email address into the form below.
(NOTE: I greatly respect your privacy. I will never sell, rent, share or give away your email address to anyone. There is no obligation. You can unsubscribe at any time. After you click the button, you'll be taken to a page to thank you.)
Or, you can subscribe to the 7 Reasons to Invest for Income Now More Than Ever RSS feed. Just click on the orange RSS feed icon below:
Disclaimer:
I am not a financial advisor. I am not a broker. I am not a financial planner.
I have no professional licenses.
I am a wide reader and an independent thinker and this site gives my opinions on the subject of income investing.
Nothing in this site is to be construed as professional advice.
I am not responsible for the results of your investment decisions.
Past results are no guarantee of future returns.
You must read, think over what I say, make your own investment decisions and take responsibility for your own life, including the results of your investment decisions.
Continuing to stay on this site implies your acceptance of these terms.
