Net-Teams, Inc.
HOME | Membership Websites | SMM Solutions | CRM Solutions | Online Training Systems | Publishing | Clients | Guarantee | Log In

Higher income from high yield bonds

Submitted by Janeane Carnagie | RSS Feed | Add Comment | Bookmark Me!

To understand high yield bonds, let's define what a bond is. A bond is an interest-bearing investment that obliges the borrower to pay a specific amount of interest for a specific period of time and then at maturity to repay the investor the original amount of the loan. High yield bonds are bonds issued by corporations. These companies pay interest rates higher than those of top quality government or corporate bonds to attract investors. Corporate assets back the bonds; incase of default, the bondholders have a legal claim on those assets.

High yield bonds can offer many advantages: 1. As the name implies, high yield bonds frequently have higher yields. They can be called (redeemed) earlier, which is one reason investors receive higher interest payments. In general these bonds have shorter maturities. Downturns in this investment category have not been as dramatic as in other investment categories.

2. High yield bonds have become a large global market and lack of liquidity is not a huge concern.

3. High yield bonds are not perfectly correlated with other investment categories.

4. High yield bonds have to earn higher returns in order to compensate investors for higher risk. High yield bonds tend to combine the higher returns associated with equities and the lower risk associated with bonds.

5. These bonds will fluctuate based on more than just the direction of interest rates; they will also increase or decrease in value as the issuing company improves its financial performance.

During the previous five years, high yield bonds have generated superior returns compared to more conservative bond funds. However, these returns are less than those of some aggressive equity funds. Investors should invest a portion of their portfolio in this investment category to reduce their risk and increase their income and return potential.

High yield bonds play an important role in a well-diversified mutual fund portfolio for both the conservative and aggressive investors. This sector will still incur risk; but the worst downside risk displayed by this investment category was a loss of 8 percent. Investors who want to capitalize on the opportunities of high yield bonds could consider several mutual funds.


Contact Us
Support and Sales
Contact Us

LinkedIn Recommendation: Reita Scheidel - Social Media Analyst at General Products - I had Teo create a broadcast page for my site that integrated with YouTube videos. I really like how it works and am working with him on another project called iTVMaker.com - I think this will be a real winner because I have Teo on my team. We're hoping to launch at the end of this month and I know it will be fun for everyone! Teo is easy to work with and I have a great time every time we plan a new phase for our projects! - March 17, 2012, Reita was Teo's client

Welcome!

Search Articles On Net-Teams

Featured [Investing] Articles:
Net-Teams - Helping Businesses Prosper With Custom CRM, SMM and Online Training - Net-Teams, Inc. (NTI) is a technology and marketing firm and offers access to a core set of system t...
The Benefits Of A Membership Program For Your Website - Building membership through your website allows you to automate the acquisition of prospects and cus...
eWorkshop Hosting - The More Effective Way to Build Your Business with Online Ed - More and more companies are using eWorkshops to reach out to customers, prospects and employees. An ...
eWorkshop Publishing From Net-Teams - As many people are discovering, self-publishing is a time consuming venture, which takes time away f...
What is Social Media Management And Why Is It So Critical? - Whether or not you have a customer relationship management (CRM) system in place, there is one key r...

Related Tags (related articles): Investing (650), high yields bonds (1), bonds (115)