Corporate bonds function like this – when businesses and corporations are looking for lenders. They don’t want to go public and sell their shares or parts of their company publicly, but they do need money to borrow. Mostly it’s when they can’t get money from banks they hire financial professionals to help with this public lending.

Corporations will borrow for a certain period of time and then pay a yearly interest rate on the loan until the bond matures.

This is considered the most risky of all bonds because you don’t know if the company will pay you back or they can fold. As with all higher risks, the rewards are much higher.

Recommended Read: Everything You Need To Know Before Buying Bonds

How the corporate bond is paid off:

The company, government or municipality pays back in different time frames. This is called coupon rate or coupon yield.

Some can pay monthly, by-yearly, yearly or at the end of its maturity.

This information is known to the public when you purchase, and you make the decision.

Benefits of buying corporate bonds:

The good thing about corporate bonds is that the risk is much lower than other investments, thus the rewards are lower too. You will make your money back! Corporate bonds have more advantages, they are liquid and more diverse than stocks

NOTE: There are minimums to when purchasing bonds. Each brokerage and financial institution has different policies.  There usually aren’t any fees or commissions. Just find out about the minimum purchases and also the different time frames.

Related Read: What are US Treasury Bonds?

How To Start?

Firstly, if you want to learn how to become a day trader and start trading on your own with ease and confidence – Sign up for the FREE Mini Course.

Let`s get to know each other. You can learn more about my journey and how I started here.

After that, if you have any questions you can always ask me at traderchick.com. Come to my Facebook group and introduce yourself, let me know your experience with trading.

So if you are ready to go beyond the basics, learn day trading and start your dream life – check out MY COURSES.