- Tax Planning
- Investments 1: Before you Invest
- Investments 2: Your Investment Plan
- Investments 3: Securities Market Basics
- Investments 4: Bond Basics
- Investments 5: Stock Basics
- Investments 6: Mutual Fund Basics
- Investments 7: Building Your Portfolio
- Investments 8: Picking Financial Assets
- Investments 9: Portfolio Rebalancing and Reporting
- Retirement 1: Basics
- Retirement 2: Social Security
- Retirement 3: Employer Qualified Plans
- Retirement 4: Individual and Small Business Plans
- Estate Planning Basics
There are three types of international bonds: international bonds, Yankee bonds, and Eurobonds. International bonds are issued by international companies and sold internationally in various countries and currencies. Yankee bonds are issued by international companies and sold in the United States in U.S. dollars. Eurobonds are issued by U.S. companies and sold outside of the United States in U.S. dollars. The list below summarizes characteristics of international bonds:
- Issuer: International bonds are issued by U.S. or international corporations.
- Par value: International bonds are issued in amounts of $1,000 and greater. The par value of international bonds may be in different currencies.
- Maturity: International bonds have varying maturity lengths. Generally, short-term international bonds mature in one to five years, intermediate-term international bonds mature in six to ten years, and long-term international bonds mature eleven or more years.
- Taxes: International bonds may be subject to federal, state, and local taxes. Depending on where the bond is issued, international bonds may also be subject to foreign taxes.
- Risk and return: Risk and return varies depending on the type of international bond. International bonds are more risky than government and corporate bonds, but they typically offer higher returns than those offered by corporate bonds. International bonds may also be risky in terms of exchange rate (currency).
- Ratings: International bonds are rated in the same way as corporate bonds. Bond-rating companies rate both U.S. companies and large international companies.
- Trading: International bonds are either traded by brokers over the counter or in an exchange. These bonds may also be traded in domestic bond markets of foreign countries, as well as in the Euromarkets (markets outside the United States where securities are traded in the U.S. currency).
- Call provision: International bonds are sometimes callable.
U.S. Treasury Savings Securities
U.S. Treasury savings securities come in many forms: the most common types of U.S. Treasury savings securities are EE bonds and I bonds. EE bonds are sold at a discount, and I bonds are sold at face value and interest is paid at maturity. Both securities have variable interest rates. The list below summarizes characteristics of U.S. Treasury savings securities:
- Issuer: U.S. Treasury savings securities are issued by the U.S. government. They are not marketable (i.e., they cannot be resold to others), but they can be redeemed at local banks.
- Par value: U.S. Treasury savings securities are issued in amounts of $25, $50, $100, $1,000, and $10,000. They can be purchased over the Internet at www.treasurydirect.gov without transactions costs.
- Maturity: U.S. Treasury savings securities that are redeemed within five years usually charge a three-month interest penalty. Investors can hold U.S. Treasury savings securities for up to thirty years.
- Taxes: U.S. Treasury savings securities are registered as bearer bonds, which are exempt from state and local taxes. Another benefit of this type of security is that the interest is completely tax-free if it is used to pay for qualified educational expenses. Other taxes are deferred until maturity.
- Risk and return: U.S. Treasury savings securities are government securities, so they have minimal risk. The return on EE bonds is variable and changes every six months. The return on I bonds is also variable: this rate of return changes every six months to account for a guaranteed return over inflation for six months, as well as a real-return component. The real-return component is a guaranteed return amount over and above the return on inflation.
- Ratings: U.S. Treasury savings securities are not rated because they are government securities.
- Trading: U.S. Treasury savings securities cannot be traded. They can be purchased over the Internet and redeemed at local banks.
- Call provision: U.S. Treasury savings securities are not callable.