Bank Bonds Tag's Archives
A bond is a loan. It’s nothing more than a fancy IOU in which the terms, pay-back date and interest rate are carefully spelled out in a legal document.
It’s like in any relationship, it’s a promise made by both sides. In business term, it’s an approach in finance. When they need something today, they promise to pay for it at some point in the future. And those promises are called bonds.
annual interest rate, Bank Bonds, Bonds Investment, business term, credit rating agency, Debt Security, Financial Markets Association, fixed-income security, interest payment, interest rate, Investment Analysis, Investment Principle, Investment Skill, Investor View, legal document, Securities Industry, Treasury Notes, Valuable Investment, Wall Street
In most financial textbooks, they advise diversifying your funds into many different investment vehicles like bonds, stocks, mutual funds, money markets instruments as well as spreading your money across numerous different sectors and different countries to diversify your risks. To an average investor who has low financial competence and needs the wide diversification to lower risk, this makes sense. However, while this kind of broad diversification guarantees low risk, it also guarantees low returns of 5%-8%.
Don’t follow those strategies. Warren Buffett advises that ‘broad diversification is used by people to protect themselves against their own ignorance.’ If you know what you are doing (high financial intelligence), you should concentrate your portfolio into equities (stocks & mutual funds) as they achieve the highest return. And you can achieve low risk not by simply spreading your money around, but by your competence of knowing which funds and stocks to pick.
Bank Bonds, capital guaranteed funds, Cash Saving, Extra Income, Financial Competence, Growth Basket, high financial intelligence, insurance, money baskets, Monthly Salary, mutual funds investment, personal housing, Return Of Investment, Savings Management, Security Basket, stock market, Valuable Investment
