Investing In Bonds | Bond Mutual Funds

The IMF predicts the U.S. economy to slow down.

The outlook for Western Europe and Japan isn 't too big.

Headline inflation has increased in both advanced and emerging economies.

The price of oil has doubled in the last six months.

There is the possibility of further economic slowdown.

The stock markets of most countries have plummeted in recent times.

These statements are not new to regular readers of newspapers, journals, particularly financial. Everyone has been affected as a result of the consequences of these statements. In difficult times like these, where to put your money? Stock market "should not be suicidal! Banks" rate of return would be too low. So where?

One of the possible sites are mutual funds. Mutual funds are much safer than stocks and get better returns than banks. But be careful when choosing an investment fund in times of recession. It is always a better bet to invest in bonds during the recession. It ensures regular interest payments and possible capital appreciation when bond price increases. Bond mutual funds allow you to get exactly that.

As its name suggests, these funds invest in bonds and debt securities. These funds are intended to protect the capital invested and at the same time ensure a regular income from interest payments. Like any other investment funds, these funds also have a net asset value (NAV), which is the value of each share of investment funds. It's just what you pay for a share of the fund or what you get when a portion of the fund is sold.

5 reasons why you should invest in bond mutual funds:

1. They are much less risky than shares

2. They provide stability

3. Are diversified "portfolio will be through many different bonds reduces the risk of default and ensure the regular payment.

4. Certain types of bond funds are exempt from federal and / or state taxes

5. They are more liquid than bonds.

Among these advantages, the latter is the most important. It's why you need to buy bond funds rather than individual bonds. They can be easily bought and sold in smaller units. On the other hand, is not so easy to buy and hold bonds. The bonds are not as liquid as bond funds. Therefore, it is better to buy bond funds instead of bonds.

TYPES OF FIXED INCOME FUNDS

There are many different types of funds. Of these, some of the most important are the funds of the public debt (federal funds or bonds), municipal bond funds, corporate bond funds, etc.

The treasury bond funds

These funds invest in debt securities issued by the government as Treasury bonds, Treasury bills, Treasury bonds, mortgage-backed securities issued by government agencies, etc. Some of these funds are also exempt from state taxes and / or local .

Municipal bond funds

These funds invest in securities issued by state and / or to local public works like building bridges, laying of state highways, school construction, etc. Some of these funds are also exempt from federal taxes. Because they have the backing of the federal government, which are considered to have very high scores.

Corporate bond funds

These funds invest in debt securities of corporations. They have no government backing, so are a little riskier than the other two types of funds. But they pay much higher income than government funds.

Apart from these funds there are many other types of bond funds, such as zero-coupon funds "that invest only in zero coupon bonds, international funds" that invest in bonds, convertible securities funds, "which invest in convertible securities (bonds that can be converted into shares), etc.

These are some of the funds that an investor can expect to invest. However, there are many alternatives to invest. To learn about investing in mutual funds investing in mutual funds visit and to get an idea of ??how mutual funds work visit Mutual Funds. You can also visit Exchange Traded Funds to know about the exchange-traded funds.