How to buy bonds? Guide to buying bonds

People who are successful in the field of business and investment, in order to spread their capital and prevent irreparable losses, create a portfolio and divide their assets in different ways in this portfolio. The main methods of maintaining assets are keeping cash, buying property, buying dollars and gold, and buying securities. There are different types of securities within its scope, which can be mentioned as ordinary shares. preemptive rights, preferred shares, partnership bonds, treasury bonds, murabaha bonds, Istana bonds, and bonds. In the article, you are reading you with bonds And we introduce related terms.

What are bonds?

Bonds are bonds that are issued by a company and given to individuals. These bonds are a special type of securities that, under a contract, the issuing company is obliged to pay a certain amount to the bondholder at a specific time. This time is announced when the papers are handed over to the holder. Also, the bond issuing company is obliged to return the principal of the buyer’s money to him. The people to whom the bonds are awarded will not actually own a part of the company and are only considered creditors and have a specific Riyal value when they are given to individuals. These bonds are divided into three categories according to the maturity period:

Also, bonds include three types of government, municipal and corporate bonds. Some governments issue bonds in order to obtain the expenses they need. Meanwhile, the bonds of governments with stronger economies are safer and less risky. On the other hand, there are bonds of developing governments, which are high-risk and less secure. Municipal bonds are issued by the municipalities of a city. Municipalities sell these bonds to obtain the funds they need to build schools, airports, and hospitals. The interest from these bonds is tax-free. Bonds A company is sold by companies to cover their expenses. These bonds have high risk, But one of their advantages is the higher interest rate of these bonds. It should be noted that these bonds also include taxes. Where To Cash Savings Bonds?

Bond value

For bonds, a certain value is determined at the very beginning of the transfer of these bonds. This value is proportional to the estimated production rate for the company.

Features of bonds

Bonds have their own special features, some of which are mentioned below:

1- Credit document

It is a sheet that is given by the company to the person who buys the bonds. According to this document, the person who owns the note can receive the interest corresponding to it and, at the maturity of the notes, he can get back the principal amount from the company. It should be noted that the debenture holder will not become the owner of a part of the company and if the company makes a loss, he will not share in this profit.

2- Bond maturity date

The maturity date of the bonds is a specific date on which the company is obliged to pay the principal of the nominal amount of the bonds to their holder. As we said before, this date is known at the beginning of the handing over of the papers.

3- Nominal value

All bonds initially have a certain Rial value, which is called nominal value.

4- Priority

The priority specifies the time to receive the principal amount of the note and its interest in case of bankruptcy of the company. The people who are bondholders have more priority than the shareholders of the company and they will get the principal of their money sooner than them. Of course, the bonds themselves can also be different in terms of priority, this difference is determined at the time the bonds are issued.

5- Collateral

The property or building that the bond issuing company specifies as a guarantee for these bonds is called collateral. This is despite the fact that the company has just started its activity. Usually, if the company is reliable and has a name and logo, there is no need to set a guarantee.

6- The right to vote

The right to interfere in some of the company’s work by bondholders is called voting right. Of course, not all bonds give this right to the holder, and only certain types of these bonds grant voting rights to their owners. If he has the right to vote, the bondholder can comment on matters such as merging the company with other companies or issuing bonds. The holder of the right to vote can comment on many decisions of the company, especially when the company refuses to fulfill its assigned duties.