Corporate Bonds
Buying corporate investment bonds means lending money to the issuing
company at a certain interest rate. According to
www.investopedia.com, corporate investment bonds usually have higher
interest rates than government investment bonds.
This is mostly because they carry higher default risk than government investment bonds.
With the high interest rate, corporate investment bonds may be a good way for retirees to earn income. The risk may be higher than government investment bonds but it still depends on the issuing company track record.
If the issuing company is well established and profitable with good track record, the risk will be lower than bonds issued by extremely unstable company.
Corporate investment bonds can sometimes be purchased directly from the issuing company. Also just like other types of bonds, they can be purchased from investment brokers.
These bonds can also be sold or transferred at the market value. Just like other types of bonds, corporate investment bonds prices will drop when interest rate is high.
This is the best time to buy
corporate investment bonds, with the hope that interest rates will
fall and bond holders can sell them at higher prices to gain profit.
Again, the longer the bond terms, the higher the risk.