## Sunday, 23 May 2010

### Investment Portfolio

## Saturday, 22 May 2010

### All about Bond

**Bond:**

*fixed-income securities*".

**Issuer of a Bond:**

- U.S. government
- Government agencies
- Companies
- Cities

**Why Bonds are Issued?**

**Nominal Value of a Bond (par value, face value or the principle):**

**Interest Rate of a Bond:**

- Fixed
- Floating
- zero-coupon bonds

**Maturity Date:**

**Redemption Date of a Bond:**

**Current Price of a Bond:**

**Nominal Yield of a Bond:**

**Current Yield of a Bond (running yield):**

**Redemption Yield of a Bond:**

**Bonds Benefits**

- Stable and predictable; unlike stocks - A Bond price doesn't go up and down like Stocks

- On the maturity date you will get the capital back + all the interests you have already received

- You can sell your Bonds to other investors which means you can raise cash if you need to

**Bond Screening Tools?**

**Why market price of a Bond changes?**

**Links:**

- Investopeida's Bond Basics: http://www.investopedia.com/university/bonds/
- http://www.smartmoney.com/investing/bonds/ useful tools and information for Bond investors
- http://www.bonds-online.com
- www.investinginbonds.com
- http://finance.yahoo.com/bonds
- How to Calculate Gross Redemption Yield: http://www.ehow.co.uk/how_5951552_calculate-gross-redemption-yield.html

## Sunday, 9 May 2010

### Understanding Compound Interest

Compound interest can be calculated with the following formula:

**FV = PV (1 + i)^N**

**FV** = Future Value (the amount you will have in the future)

**PV** = Present Value (the amount you have today)

**i** = Interest (your rate of return or interest rate earned)

**N** = Number of Years (the length of time you invest)

**Example:**

Assume you have £1000 and you want to invest it for 10 years. You found an investment with 10% return, so after this period what will you have? £1000*((1+ 10%)^10) almost £2,600

If the interest was 0.05%, then after 10 years you would have almost £1,630.

So, in the former example you would have £1600 interest whereas in the later only £630 which is slightly above third of the former although the later interest rate was only half of the former.

**Regular Saving**

Now, imagine you'd save £1000 every year for 10 years and each year the interest rate would be 10%.

How much will you have at the end of the 10 years?