Category Archives: Government Bonds
Which countries around the world offer good prospects for investments in government bonds? The choices available to investors are numerous and some countries may be a better investment choice than others. Some governments around the world are experiencing a debt crisis, and the most public of these is the situation in Greece. Other governments may be a solid or ideal choice for investors because the bonds offered are considered a very low risk for default.
All investments walk a line between potential returns and risks. A risk is the chance you will lose some of all of your money and a return is the money you make on an investment. To gain the higher return, you generally need to take a greater risk and those investments with lower risk have the lowest returns.
Japanese Government bonds, similarly to government bonds of any country, are in fact debt securities or promises to return your money at the end of the bond term along with interest, unless it’s a zero coupon bond. In order to assess the risk associated with Japanese Government bonds or any other bonds issued by other foreign government, one needs to consider an overall political and economic stability of a certain country.
How do government bonds work? They are issued by a government of a country, and they are issued in the currency of the country that is offering the bonds. It is possible to find short, medium, and long term government bonds offered by many different companies, and there will be various interest rates. They are considered debt securities
Treasury bonds rates today are at the lower end of the spectrum when compared to the historical value of these notes. The rate for a 30 year treasury bond as of 10/07/2011 is 3.02 %, and this rate decreases with the term of the bond. For a 20 year bond the government bonds interest rate is 2.87 %, and a 10 year treasury bond offers 2.10 %. The treasury bonds rates for a 7 year bond right now is only 1.61 %
1. Greece- One of the top government bond yields by country belongs to Greece, and the yield offered is 23.53. This is a significant increase over the last few weeks, caused by the economic troubles this country is facing.
2. India- India offers one of the best government bond funds where yield is concerned. A yield of 8.58 is significantly higher than the one offered by many countries, but there are also higher risks involved as well.
Treasury bills, commonly called T-bills, are securities which mature less than one year from the date issued, but how are the rates for these bills determined? Unlike coupon bonds and other bond types which pay interest until maturity, T-bills do not pay an income while awaiting maturity. Instead, Treasury bills are auctioned off, with each security having a one thousand dollar face value.
Canadian government bonds come in a wide range and number of different types. To be eligible to purchase bonds offered by the Canadian government you must be a citizen of Canada, unlike United States savings bonds which do not have any citizenship requirements. One type of bond offered by Canada is a savings bond which can be turned it at any time at all, without any restrictions even before the bond maturity date has been reached.
Swiss government bonds can be an excellent choice for many investors, and electronically traded funds can help you invest in a wide variety of these bonds with a single investment amount. Purchasing many individual bonds can require a lot of time and effort, and ETFs can simplify this process and eliminate the research and bond comparisons that require choosing the best bonds possible. These funds can include long, intermediate, and short term government bonds. Swiss government bonds ETFs can allow you to greatly diversify your international portfolio quickly and easily, and most of the bonds included have excellent credit ratings and decent returns. There are a number of these funds to choose from.
One of the most common questions asked by an investor is which savings bonds are the best choice? The answer will depend on what your investment goals and specific circumstances are. There are several choices when it comes to investing in government bonds, and while one type of bond may be perfect for one investor it could be a bad choice for another. If you are investing retirement funds then you may choose different savings bonds than if you are investing for your child’s college education. You will also need to determine whether you want a fixed interest rate or one that is indexed and linked with inflation.
Why should American investors choose Australian government bonds? For a number of reasons, including a higher return than what can be found with United States savings bonds in most cases and international investment exposure in your portfolio. Both bonds have been rated as AAA, which make them the best investment grade possible and show a high level of security. Australian government bonds offer an interest rate which is higher than what can normally be found with US bond investments, and the economy of this country is stable and well developed. Unlike a foreign investment in some smaller or less developed countries, with bonds from the Australian government there is no political uncertainty or high degree of risk involved.
German government bonds are one of the many types of government bonds available to investors. These bonds can give you international exposure, and be very beneficial in making your portfolio more diverse. Just like United States savings bonds, the bonds issued by the German government are rated AAA prime by the rating agencies, making them an ideal choice for almost any portfolio. The government bond market in Germany is one of the most liquid out of all the European countries, and there are several types of German government bonds to choose from, depending on how long you want to hold the bond until it matures.
How is the government bonds interest rate determined? This depends on the bond rate type used. The interest rates used for US government bond securities come in two varieties, fixed rate interest or inflation rate interest. Twice a year, in May and again in November, the Secretary of the Treasury will reveal the fixed interest government bond rates, although exactly how the rate is determined is not made public. This is the rate that will be used for the next six months as the fixed government bonds interest rate. When the fixed interest rate percentage is released this number will always be either zero or more than zero, and is never a negative number.
Investing in government bonds can be an excellent choice if you want a safer and more stable option than the volatile stock market. While the return may be less with United States savings bonds than if you choose a stock that suddenly takes off, the risks are also much lower as well. These investments are not usually taxed at the state or local level, and in some cases federal taxes may not be applicable as well. If you are thinking about investing in government bonds there are many benefits with this type of investment, and the tax liability is just one of these. These bonds are ideal if you are willing to trade a smaller but dependable return in exchange for stability and very low risk.
If you feel weary of volatile markets and constantly having to worry about your investments in the stock market or real estate, look no further than United States savings bonds. United States savings bonds are considered the most secure investment in the country being backed up by the credit power of the United States Government. While the interest rates on United States savings bonds might be generally low, you principal payment is well protected and is guaranteed to be fully repaid along with compound interest rates at the end of the maturity period.
Investing in United States savings bonds is also a very tax advantageous decision since principal payments to purchase such bonds are tax deductible and you can additionally defer tax due on the interest income if you wait until the end of the maturity period.