Bonds of enterprises as one of the ways to increase equity
It is quite difficult for a simple man in the street to understand what a bond is and what it is for. And, anyway, this is a type of security that can bring a good profit, if you observe a number of conditions for its acquisition.
Let’s start with the concept of bonds. In simple and accessible language for the average reader, bonds of enterprises – a valuable debt paper, through which its owner can claim to receive from the company funds corresponding to the value of the bonds after a certain period of paper. Either to receive any property equal to the value of the bond, or a fixed interest on it.
You ask, what is the benefit? And the benefit is inflation. After all, the value of securities, as well as the capital of the enterprise, is growing at the same time. This means that in a year or other time period the value of the security you bought will be higher by a certain percentage. It is the interest or discount that is the benefit of buying the company’s bonds.
Sources of bonds
Typically, the income received from bonds is significantly higher than the income received from placing funds on a Bank Deposit. Bonds can be issued both by a commercial enterprise and by state or local authorities.
It is worth noting that the purchase of bonds does not give you the right to participate in the management of the enterprise. If you are thinking about where to invest, you need to understand how long you are going to invest and when you expect them to benefit. If you plan to get the benefit from your investments in a couple of years, then the bonds of enterprises are not for you, since in this case the benefits are not planned for earlier than a few years.
In addition, there is some risk of investing in corporate bonds, as the benefits will depend primarily on the success of the company. However, if you are going to invest in a large and stable Corporation, such an investment is considered to be very reliable and profitable.