Corporate Bonds

Companies often issue stocks in their companies, known as corporate bonds. These bonds can be bought and sold on the stock market. You will be paid an interest rate, determined by the terms and conditions of your particular bond and the time when you purchase it, and your original investment will, in theory, be repaid when you choose to sell your bond. The returns made on your investment are taxable. There is no guarantee that your original investment will be returned to you at its original value, or even at all, because the corporate investment market is volatile and depends on a range of economical factors which will affect the value of your bond from day to day. It is possible that you will lose your investment entirely if the company in which you have invested registers insolvency. However, over a long period of time, corporate bonds will tend to pay reasonable returns, if only because prices tend to increase from year to year.

It is vital that you choose the companies you wish to invest in with care and consider the potential risk involved; it is important not to invest any money in corporate bonds that you cannot afford to lose. Corporate bonds do not offer the government-backed security of gilts; they are an investment opportunity with which you stand the chance of making impressive investment returns but which for that reason offer you minimal investment security. You can purchase corporate bonds through a stockbroker, but many high street banks and building societies also offer corporate bond packages or stockbroking accounts; for more information ask an independent financial advisor or an advisor at your local bank.