The Money Farm Team

AAA is the highest credit rating that any of the main credit rating agencies may give to an issuer’s bonds. AAA-rated bonds have a high credit rating since their issuers are able to satisfy their financial obligations with ease and have the lowest chance of default. The initials “AAA” are used by rating firms Standard […]

Advance refunding occurs when the revenues of a new bond issuance are held for more than 90 days before being used to pay off (refund) the obligations of an existing bond issue. The Interest on Bonds Issued to Advance Refund Another Bond exclusion from gross income was removed by the Tax Cuts and Jobs Act

AAA is the highest credit rating that any of the main credit rating agencies may give to an issuer’s bonds. AAA-rated bonds have a high credit rating since their issuers are able to satisfy their financial obligations with ease and have the lowest chance of default. The initials “AAA” are used by rating firms Standard

Government bonds have the advantages of being more secure investments, having tax advantages, and allowing investors to support actual projects. A lower rate of return and interest rate risk are both disadvantages. What are two benefits of bond ownership? They give a steady stream of money. Bonds typically pay interest twice a year. Bondholders receive

Municipal bonds are an excellent method to keep your money safe while earning interest. The majority of them are tax-free at the federal level, and several are also tax-free at the state and local levels. What are the benefits of buying a municipal bond? A municipal bond is a fixed-income security issued by a government

A debt tender offer is a public request to a company’s bondholders to sell back their bonds or debt instruments at a given price and within a specific timeframe. When interest rates fall, companies will consider a debt tender offer since it is cheaper to borrow than to keep older bonds with higher fixed coupons.

Stocks provide ownership of a company as well as a share of any cash dividends (‘Dividends’). Bonds allow you to participate in lending to a business but do not give you ownership. Instead, the buyer of a Bond receives periodic payments of Interest and Principal. What is the distinction between stocks and bonds? Stocks and

Stocks outperform bonds in the long run. According to investment research firm Morningstar, major stocks have returned an average of 10% per year since 1926, while long-term government bonds have returned between 5% and 6%. Is a 6% rate of return acceptable? The answer to such question is highly dependent on current events. However, a

The rule of thumb that advisors have typically recommended investors to employ in terms of the percentage of stocks an investor should have in their portfolio; for example, a 30-year-old should have 70% in stocks and 30% in bonds, while a 60-year-old should have 40% in stocks and 60% in bonds. What should my investing

Companies have a sinking fund for bond issues, which is money set aside or saved to pay off a debt or bond. Bonds issued by sinking funds are less risky because they are backed by the fund’s collateral and so have lower yields. Paying off debt early with a sinking fund saves money on interest