A long bond is a safe and stable investment in bonds with a maturity of 10 years or more, offering a guaranteed principal investment and set interest rate, backed by the stability of its issuing body.
A long bond describes any investment in bonds with a maturity of 10 years or more. Sometimes the term “long-term bond” can be used to refer specifically to the US 30-year bond. A bond is a type of investment very similar to a promissory note.
When you buy a stock, you are buying partial ownership of a company. Stock gives you a piece of the company in exchange for your investment. When you buy a bond, you are not buying part of the company, but you are lending money to the company, with the promise that the money will be paid back to you on a certain date with a specified amount of interest.
A long bond is a bond purchased from a government, company, federal agency, or other issuer with a maturity date of 10 years or more. Bonds’ maturities may vary, but they must be a “long-term” investment. Corporate bonds must have a maturity of at least five years. US Treasury bonds, the type most people are familiar with, must have a maturity of 10 years or more. All United States Treasury bonds can be called long bonds for this reason.
A long bond tends to be a very safe and stable investment. Interest rates for bonds tend to be higher as the bond’s maturity lengthens. For this reason, a long bond will tend to have a higher interest rate than a shorter bond. The long-term bond is a very safe, or safe, investment for a number of reasons.
The first reason why a long-term bond investment is safe is that the principal investment is guaranteed. Some investments, such as stocks, mutual funds, or precious metals, may lose value over the time of the investment. A bond guarantees that your initial investment, or principal, will be returned to you on the maturity date. A bond cannot lose value.
The second reason why a long-term bond is a safe investment is that the interest rate is set. Once a bond is purchased, it will always be worth the final price at maturity. It doesn’t matter if the stock market or interest rates go up or down, the bond will be worth its final price on the maturity date.
A long link is also very safe because it is backed by the stability of its issuing body. A United States Treasury bond is paid based on the resources of the United States government. As long as the country is still in existence at the time the bond matures, your bond will pay for your investment. A long-term bond might not be as exciting an investment as playing the stock market. There may be other investment opportunities that have the potential for higher returns, but a long-term bond is a safe and stable investment that will provide long-term returns with strong collateral.
Smart Asset.
Protect your devices with Threat Protection by NordVPN
