A $100 Bill is always Worth $100, Right?
style=’clear:both; float:left; padding:10px 10px 10px 0px;border:0px; max-width: 350px;’ alt=’condo rent bangkok’ src=’https://lh4.googleusercontent.com/-nlaCAQU8eEk/TxT5ECb7YII/AAAAAAAACnI/KmgzSHiBJhE/s400/Woodgears.jpg’ loading=’lazy’>Despite the much-publicized downgrading of the United States’ credit rating, Treasury bonds are considered risk free. However, with low risk comes low interest rates. The government has never failed to pay back a bond. Unlike the $50 that your friend wheedles from you, bonds are marketable. Their reliability makes them popular, so you’ll usually find a buyer or a seller. Like houses, they might be bought and sold many times before they mature. They’re a good choice as long-term investments, balancing out shorter-term, higher-risk, higher-returning investments in a portfolio. Bonds are the tortoise in Aesop’s fable of the tortoise and the hare, slowly but surely returning a tidy little profit. Also, the interest is free from state income tax.
Also, while the interest pays every six months, you won’t see your initial investment money for up to 30 years, assuming you keep the bond to maturity. And since many brokers charge a fee per transaction, that can save money in the long run. That could be a problem if you need it before then. On the other hand, bonds require less maintenance than stocks or a mutual fund. Barring some drastic swing in interest rates, you can feel comfortable holding onto your investment, reaping its returns until it matures.
Newly issued bonds, however, are paying 4 percent interest. Your bond, with its greater return, is comparatively more valuable. To trade in bonds requires a primary dealer or a broker. You might decide to sell it at a loss, or a discount, in order to buy a higher-returning bond. The buyer also pays you the interest the bond has accrued since the last payment date. On the other hand, if new issues are returning 6 percent interest, your bond is less valuable. You could sell it at a premium, a price higher than its face value that depends on the inflation rate, predicted interest rates and other factors.
This transaction is conducted conveniently through the Treasury’s online service, TreasuryDirect. You can sell your bond at any time before it matures to take advantage of this fact. During an auction, all noncompetitive bids are filled first. Competitive bids are then doled out until the entire issue has been sold. But as we said, bond prices change over time. For example, suppose you own a bond that pays 5 percent interest.
Also like a house, a bond’s price can rise or fall depending on economic factors. Normally, the Treasury sells bonds at auction four times a year. A bond sale is actually two simultaneous auctions, with primary dealers as the main bidders. That’s a good question, and it’s where we’ll start our investigation. But money is different from a house, you say. On the next page, learn how your interest in bonds can yield a profit. A $100 bill is always worth $100, right? The dates and the total value of the bonds issued are announced in major newspapers and financial publications. Primary dealers are large, institutional investors that trade directly with the Treasury.
It also sported a spiffier cockpit and a $23,000 base price, about $3000 upstream of its sibling. Released in fall was a performance-minded Sky Red Line. Otherwise, it was the same appealing package: base 177-bhp 2.4-liter Ecotec four, manual or optional automatic five-speed transmissions, all-disc brakes, 18-inch rolling stock, a manual-folding cloth top with heated rear window, and an options sheet showing limited-slip differential, leather upholstery, satellite radio, rear spoiler, and chrome wheels. Sky also had its own suspension tuning for the plusher ride Saturn thought its customers would prefer. That was owed to no-cost antilock brakes, air conditioning, cruise control and power windows/door locks, all options for Solstice.
