Junk Bonds

By | October 3, 2013

You might not think that this could possibly be an investment opportunity that you would even want to consider but there are options that you might not have considered when it comes to junk bonds, they can have their moments of attractiveness and they could offer a way to growing money, it will be quicker but the risks will be higher.

Junk
Risk

The risk of these bonds are high, which is why they have the high coupon payments, they are trying to attract investors. They want them to invest in their bonds and they are able to attract the interest in these by offering some really great coupon values. But you should not invest all your capital in a bond that is such a high risk.

If the bond is rated at a ā€˜dā€™ then it means that is has already defaulted in payments and might be a warning sign as to avoiding the bond. Or if you feel that the company might make a recovery it might be a risk you are willing to take.

Purchase

Some of these bonds can be a popular choice for investments, especially if it is only a small proportion of their capital. However there are some legal restrictions on certain companies, that will not allow the purchase of bonds if they fall below a certain grade.

Investing

There are many places that you can go to invest your money in junk bonds, and they can be purchased from your stock broker, or you can invest in them via a mutual fund. This will give you more protection than if you were to purchase them yourself because you are spreading the investments with others and this spreads the risk that you would be liable for if you invested in the bond on your own.

Choices

Making your own choices is vital in putting any money into investing and you have to have thought about each investment and if it is in line with your investment plan. Always do your research and only then should you consider where you are going to place your capital.

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