BONDS

Bonds are a contract between a borrower and a lender in which the borrower promises to pay, at maturity, the face value plus a specified amount of interest for the period of time that the bond is outstanding. Also called a "debt security," bonds are usually issued by government agencies, municipalities, and corporations.

Bonds are also known as "fixed-income" securities because the amount of income the bond may generate each year is "fixed", or set, when the bond is sold. No matter what happens or who holds the bond, it will generate exactly the same amount of money.

Bonds are generally considered safe investments. However, bonds carry the potential risk of default, no matter how remote that risk might be. They are also subject to market fluctuation, and, if redeemed prior to maturity the value of the bond may be worth less than the original cost.

Click here to get more information about U.S. government bonds.

Your Northwest Financial Group representatives can help you analyze the appropriateness of bonds in your overall investment strategy.

   

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