Risk

Risk is a part of life. Everything we do has risk involved. With investing it's critical to manage the risks. The easy way to describe risk, and management of it is like this: If you put $100 into a new business, it could turn into $1,000 or zero. You don't know which of those two [...]

Term Deposit

For the beginner series, we're discussing the various different types of investments available. Now it's time for the old stable Term Deposit. A term deposit is a deposit held at a financial institution for a fixed term, much like a special transaction account with your bank. The term generally ranges from a month to a [...]

Mutual and superannuation Funds

You might know a mutual fund under many names, including a superannuation fund, but they are a collection of some amount of stocks, bonds, cash, or other securities. When you join a mutual fund your money is put together with all the other mutual fund investors. This allows the fund manager a much larger bank [...]

Hybrid securities

Hybrid securities or hybrid shares have been very popular over the last few years in Australia. They are a complex security that combines some amount of equity (stock) and debt (bond) together. A hybrid typically provides a variable interest rate return. Like a bond, once purchased the investor will receive interest payments on a regular [...]

ETF and other exchange traded bonds

An ETF is an investment into a fund that trades some asset. This is often a combination of shares of stock, futures, foreign currency etc. These ETFs are usually built to track an asset or index such as the ASX200 Australian share index. They allow you to invest in an asset (the ETF) that will [...]

Buying stocks and bonds and Size of orders

For stocks traded on the secondary market, there are generally no minimum order amounts. For the initial offering they're usually presented in lots. There is a maximum number of stocks that can be bought, and that depends on the number of stocks on offer, and the price you're willing to pay. If you want to [...]

How the market impacts bonds

The basic principal with interest rates is simple. When economic growth is strong and inflation is rising, the Reserve Bank of Australia will increase interest rates in an attempt to slow the growth and ease inflation. As interest rates rise, new bonds are issued with higher coupon rates. This means that the new bonds return [...]

Bond Funds

Bond Funds, like Stock Funds offer professional selection and management of a portfolio of Bonds for a fee. Through a Bond Fund you can diversify the risks across a range of bonds pre-chosen by the manager. Some funds are designed to follow a market, often called an Index Fund. Other Funds are actively managed according [...]

How much is a bond worth?

Most Bonds have a face or par value, which is what the bond will pay back at the end of the term (maturity date). The face value can be different for different Bonds, anywhere from $1 to $1,000,000, traditionally however, they are quoted as if the Bond is worth $100, even if the single bond [...]

Secured Bonds versus Unsecured Bonds

We continue our beginners series discussing the different types of bonds available. Bonds can be split into two main categories, Secured and Unsecured Bonds, each with different risk factors. With a Secured Bond, the company issuing the bond is willing or forced by the lender to offer something with a market value as collateral making [...]

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