Types Of Bonds In Which You Can Invest

Sherri Ramos

When you are building an investment portfolio, you want your portfolio to be as diverse as possible. You should have both short-term and long-term investments. An example of a short-term investment, bonds can be quite lucrative. Here are some types of bonds in which you might want to invest.

Back Surety Bonds

Surety bond companies create and back surety bonds. Surety bonds provide assurance to contractors and their clients that the projects the contractors take on will be completed as promised. Regardless of how that situation turns out, you can be assured that your initial investment is returned to you. If the contractor follows through and completes the job as promised, you also earn a commission on your investment. To buy into this type of bond, you will need to contact a surety bond company to discuss investor terms with an investor relations expert.

Back Jail/Bail Bonds

Jail bonds are a type of surety bond. You could either become a bail bonds-person that provides the bond certificate, or you could offer to provide bail money to the needy with the understanding that they have to pay you back and/or any bail money that comes back is yours, not theirs. This is a fairly risky situation unless you are a bail bonds-person.

Buy Municipal Bonds

Municipal bonds are bonds issued by state, federal, or local treasuries. When you buy this type of bond, you agree to allow the city, county, state, or federal government use your invested money for whatever they need it for until the bond matures. When the bond matures, you get your money back and then some. You could cash the bond in before the maturity date, but then you run the risk of getting far less than what you invested because of current interest rates on this type of investment product.

Buy Corporate Bonds

Corporate bonds are the bonds even non-investors are familiar with. You are essentially assisting a corporation with a fundraising project. The bonds you buy accrue interest while the corporation that sold you the bonds use your money to advance a project or expand the business. Usually, you have to wait a year or more for your investment in these bonds to mature, and then you can cash out. They are considered "short-term" because, unlike stocks, you are not waiting indefinitely for them to go up in value. You receive your investment back, plus a little extra.

Contact a company, like Service Insurance Company, for more help.