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Investing in Government Bonds


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Investing is always a hot topic. The very concept that you can invest some of your money into a company and grow it, without having to run or work in the business or industry yourself sounds like a dream come true. Government bonds are often overlooked when it comes to investing because the wait for your profitable return on your initial investment could be decades, depending on the type of bond you purchase. But I’m here to show you the benefits of investing in government bonds.So here is some quick investment information for you to consider before taking some of that hard earned money and investing, so that, that hard earned money can work hard for you, earning more money.

Investing

Trust the government with your money. I know, that sounds…like the dumbest idea. But if you’ve been reading my other articles about the various types of investing you can look at. We’ve talked about IRAs, 401ks, investing in energy companies, and various other aspects of investing including, government currency. Investing in government bonds has its own advantages, in a way that private and public stocks cannot. Government bonds are not subject to taxes by state or federal taxes. Look at this as a better incentive for you to invest your money into government bonds. The return is guaranteed, as long as the country doesn’t fall into the pit of despair or a massive civil war.

Return of investment

Bonds pay back on a semi-annual basis. Well what does that even mean? It means, that when the scheduled pay off in dividends comes in being, you can count on a streaming consistent base of income. When the term residual income comes to mind, purchasing government bonds are a great way to solidify this type of income in your life.

For example:

If you buy a bond at $1000.00 at an 8% annual interest rate, per year you would make about an $80 profit. So because it is paid on a semi-annual basis, every six months you would receive an interest payment of $40. If you are buying the bond at face value.

If you are buying the bond that is meant to mature over the long run, so let’s say you’re going to buy a government bond that is meant to mature, you’re not buying it at face value. So it would be smarter to hold onto the bond than selling it after a few years. So let’s say you are buying a bond that will have a face value of twenty thousand dollars. And it is supposed to mature to that twenty thousand dollars to mature in roughly twenty years. You’d be able to purchase it now for roughly five thousand dollars. So your incentive for maintaining the bond for the next twenty years instead of cashing out on it, would mean after twenty years you’d make fifteen thousand dollars. Not a bad deal, for a five thousand dollar investment, you wouldn’t be touching for twenty years or so. You can set up either a brokerage account or a saving account for which these dividends can accumulate in. And what you do with this income is up to you, whether it be funding to be saved for buying a house, buying a car, or even planned savings for your children’s education.

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Selling your bonds

Just like any other stocks you may own, you have the ability to sell government bonds whenever is most convenient to you. And as stated above there isn’t a federal or state tax to pay, so the income is yours to keep. The tax exemption that follows these bonds is the real incentives behind investing your money in them! But it is important to understand the importance of making a government bond a long term investment. It is better to purchase and forget for the term until its date of maturity.

Investing in government bonds are a great way to wealth build over time. Unlike watching the stock market rise and fall, these bonds are a stress free and easy investment. Purchase and forget until they mature, then cash out. They are also another great way to save for your retirement without having to watch the stock market, or rates fluctuate, and feel that time is robbing you of potential profit. Government bonds are nothing new in the world of investment, and there is a lot of information readily available on them, their rates, and terms, so the research that needs to be done on them is relatively small. These are a great way for you to save for your future and your retirement on top of the other assets you are playing with in the search of your financial security.

*For more information or registering to buy Government bonds follow the link. http://www.treasurydirect.gov and get on our FREE eMail list! Good hunting!

 

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