The next section of the Action Financial Group Orientation Series will deal with Investing and the various investment products or assets:
• Saving, banking, investing
• Cash and High Interest Savings Accounts (HISA)
• Guaranteed Investment Certificates (GIC)
• Mutual Funds
• Exchange Traded Funds (ETF)
Today we will deal with bonds.
A bond is an investment in which the investor lends some money to another party, which could be a government (federal, provincial, municipal) or a corporation, Canadian or International, and in return the investor receives a promise to be repaid at a set date in the future along with a guaranteed rate of interest. The document that sets out the terms is called the “bond”. The end date is called the maturity date, at which time the originally invested amount is returned to the investor along with interest. Bond interest and principal (the original amount invested) are guaranteed by the issuer. Unlike GICs (discussed in our previous installment of this series), bonds are NOT backed by the Canadian Deposit Insurance Corporation.
Bonds can be traded in bond markets. Because bonds can be traded, they are liquid; in other words, if you invested in a bond and then need the money, you can sell the bond and receive the cash you need. They may trade at the original invested amount called face or par value, or they may trade above (at a profit) or below (at a loss). We will discuss the reason for bonds trading at a price different from the face or par value in a future edition of this Orientation Series. Bonds can be held in various account types that we described in earlier sections of this series: Open, RRSP/RRIF, LIRA/LIF, TFSA, RDSP & RESP.
We hope you will find this information valuable and will increase your financial confidence. You can always find these articles on our website www.actionfinancialgroup.com.
Stay tuned for next week’s topic! In the next section we will deal with Stocks.
Karin Rimnyak, Certified Financial Planner®
David Dryburgh, Certified Financial Planner®
Ian Barrie, Certified Financial Planner®
This information has been prepared by Karin Rimnyak who is an investment Advisor for iA Private Wealth. Opinions expressed in this email are those of the Investment Advisor only and do not necessarily reflect those of iA Private Wealth. iA private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.