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Tax Blog

Investing and Retirement Part 2: Bonds

So maybe you’re interested in starting to save for retirement, but you’re not into the volatile nature of the stock market? Well one of the alternatives, perhaps the polar opposite of the stock market, is the bond market.

The basics of a bond are simple, a bond is a loan an investor makes to a government, agency, organization, corporation, bank, etc., and upon maturity of the bond the bond issuer makes the payment back to the lender. Over time the bond gains interest which may be paid out over the life of the bond or in full with return of the original sum.

One of the benefits of bonds, which attracts consumers, is the surety that is attached to the notion of the bond. Let’s say you buy a $10,000/30 year bond with the current interest rate of 3.1%, after 30 years the bond would be worth almost $25,000. That’s a great return on the initial investment, the downside to this prospect is that it will take 30 years for the bond to mature.

Bonds are just one example of an investment you can make when it comes to retirement; however, the key to retirement is diversity. Planning for the future is never easy, and there are many ways to go about tackling the future. If you have questions about your financial situation and ways you can possibly improve, contact us at the Center for Financial, Legal & Tax Planning, Inc.

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