Home Finance What are Bonds and Precious Metals in Stock Trading?

What are Bonds and Precious Metals in Stock Trading?

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Bonds are also financial tools that you can easily invest as a beginner. Bonds are issued by the government or companies that are listed on the stock market. You can purchase bonds using your regular trading account.

Bonds

A bond is a financial tool that will not just secure your investment but also provide you with regular returns. A bond is issued by a corporation or a company or a government body at a price that is much lower than its released face value. This way you get chance to buy a lot more of the company’s shares and capitalize on the opportunity. Although you are not buying securities so you do not own any share in the company however what you actually offer is the loan to them. The company or the government needs this money for a project and is raising it by issuing public some bonds. The agreement terms in a nutshell is simple, they will take your money and invest it in a big project on your behalf. Then they will consistently pay you an interest for your money for a fixed time frame. Once the time period is over, they will return your original invested money. In a way, you get principal amount along with returns on your investment. This feature is almost similar to a bank saving except that your money is locked for a certain money with the company for the bonds issued to you. Unlike bank accounts which are not transferable, you can actually sell your bond at a higher value and make a good profit in doing so.

Bonds are good for beginners as not only will it pay them more money as compared to bank accounts but also not allow them to withdraw money as and when they like. To buy a bond, you have to check the company’s status and look at their balance sheet to ensure if they will be able to reimburse your original investment and also give you the promised sum of amount on a monthly basis. If you are fine with what you researched about the company, then you can move forward to put your money in bonds. By investing in the company’s bond, you also get chance to avail their shares at a discounted rate that is not available to those who do not own bonds.

Another type of investment that is considered as safe bet for beginners is precious metals.

Precious metals

As the name itself suggests, precious metal stocks are those investments in stock market trading that are made in buying expensive metals like platinum, gold, silver and other such precious metals. The valuation of these metals grow with time. So by making investments in these precious metals, you are rest assured that you can make profit after some months when you sell them. Platinum, gold and silver are three of the most traded metals owing to their expensive value, demand and higher returns. If you purchase 5 kilograms of gold today at a certain value, you can sell it at a higher price anytime. This difference to selling price is your marginal profit.

One major benefit of investing in precious metal stocks is that, you have the freedom to sell it anywhere in the world without affecting your bottom line profit. This is because the price remains almost same throughout and you can easily sell your precious metals anywhere in the world. Another benefit is that, unlike the other financial tools, you become the full owner of the asset and can also have physical custody of it. This is contrary to holding intangible shares. The precious metals ownership gives you the confidence of having tangible item that is real. You know one day your investment will pay off with better returns.

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