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Tuesday, July 5, 2011

Why Invest in Bonds?

Bonds are very similar to bank loan. Investing in bonds means that you are loaning your money to a corporation or government. Bonds are debt, whereas stocks are equity. If you buy stocks, you will become an owner in a corporation.

Investors can choose to invest in short, medium or long term bonds. Longer-term bonds (with maturities of 10 years or more) tend to pay higher interest rates because

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