Investing in financial markets in shares is valid when we try to create wealth, but reached a certain level, you want to draw a regular income, and are preferred to the cash flows capital growth.
This prompted me to turn to bonds. This is an introduction to investment bonds.
Shares and bonds
On the liabilities of a company, there are equity and debt. Shareholders’ equity contributed by shareholders, who own the company. The debt is an external resource, temporary. That’s where we come as bond investor: we do not have a business, but he lends money. The potential gains are limited to interest, but security is greater than action, because we are paid before shareholders.
The bond investor on a fixed income, paid by the company, His salary goes into charges the company, as well as salaries, rent or supplies. It’s sort of a supplier in the same manner as a lesson estate: it does not surface, but the capital that the company will use to recreational activity. It does not get benefits; he gets a “rent” on their loan money interest. And the lease is concluded for a number of years, after which the borrower gives back the capital.
On the other hand, shareholders have a variable income, potentially zero, potentially infinite, as what remains after paying expenses.
In English the world bond is designated by the term “Fixed Income”, which corresponds to the notion of taking any risk. The bond investor receives interest, defined in an agreement (the “Prospectus”), while shareholders collect dividends on the firm’s reserves.
Bonds have been publicized recently with EDF offer obligation to the public, but also via offers of increasing integration of bonds in life insurance. Nevertheless, their existence media remains well below that offered to share.
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