What is long bonds?
A long bond describes any investment of bonds with a length of maturity of 10 years or more. Sometimes the term "long bond" can be used to refer specifically to a 30 -year -old bond in the US. A bond is a type of investment very similar to II.
When you buy shares, you buy partial ownership of the company. Shares will provide you with the company's share in return for your investment. When you buy a bond, you do not buy part of the company, but rather by lending a company with a promise to pay you back with a specific interest for a certain date. The duration of the bond maturity may vary, but must represent a long -term investment. Company bonds must have a maturity of at least five years. The US Treasury, the type that most people get to know, must have a maturity of 10 years or more. All Usan treasury bonds to be called long bonds for this reason.
Long binding is a very safe and stable investment. Interest rates for bonds tend to be higher because the maturity of the bond extende. For this reason, a long binding will tend to have a higher interest rate than a shorter bond. A long bond is a very safe or safe investment for several reasons.
The first reason for a long investment in bonds is to ensure that capital investment is guaranteed. Some investments, such as stocks, mutual funds or precious metals, may decrease at the time of investment. The bond guarantees that your initial investment or capital will be returned to your due date. The binding cannot lose value.
The second reason why a long bond is a safe investment is that the interest rate is determined. After buying a bond, it will always be worth the final price for maturity. Regardless of whether the stock or interest rates are rising or declining, the bond will cost at its final price at the due date.
Long binding is also very safe because it is supported by the stability of itsthe issuing authority. Based on the sources of the United States Government, the US Ministry of Finance pays off. As long as the country is still at a time of maturity of the bond, your bond repays your investment. A long bond may not be as exciting as investment as playing stock market. There may be other investment opportunities that have the possibility for a higher return, but a long bond is a safe and stable investment that will provide a long-term return with a rock-salid guarantee.