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The name's Bond, Investment Bond.
Bills: Maturity date of less than 1 year
Notes: Maturity date of up to 10 years
Bonds: Maturity date of more than 10 years
Bonds are contracts with that insures that companies will repay your borrowed money plus interest. Common terms involving bonds are par value (the amount the bond issuer has to pay), maturity (the date when the bond is due), coupon rate (interest rate a bondholder receives every year until a bond matures), and yield (annual rate of return).
There are also different types of bonds like:
Corporate Bonds - A bond made by corporatations to help them expand their business. These bonds typically have higher coupon rate due to higher risk.
Junk Bonds - A this is a type of corporate bond that has high risk, has a chance for high yields. The risk is similar to investing in stocks.
Treasury Bonds/Notes/Bills - These are bonds made to the government to help it keep running. These bonds have a set interest and debt security. These bonds do interest payments semi-annually and the income is only affected by federal income tax.
Municipal Bonds - These are state and local government bonds that help fund state and local projects like construction.
Government Savings Bonds - These bonds are almost risk free, because they are run by the federal government. These bonds are also not affected by state and local income tax and provide a set interest rate on a set length of time.
Each bond has a different level of risk, which is directly porportional to the bond's yield, higher yield means higher risk. Treasury, municipal, and government savings bonds are considered low risk bonds compared to junk/corporate bonds.
Certificates of Deposit
CDs are certificates that gives the bearer the right to recieve interest, it includes a maturity date and defined interest rate. These usually last from one month to five years.
CDs are known to be a low-risk savings option.
401(k) is a savings plan for retirement that is sponsored by your employer. This plan allows you to save a part of your paycheck before taxes are applied. These savings can be used to invest in stocks, bonds and money market investments. The risk level of these investments can vary depending on which portion of the savings you which to invest in high risk investments and low risk investments. When your savings is taken out at 65, you are taxed for it.
Money Market Fund
This is an open-ended mutual fund that invests in debt secruitites. This is a low risk investment.
Equities are stocks or other securities that mark ownership interest.
Money Market Mutual Funds
Government Savings Bonds
Certificate of Deposits