There are certain things you must understand about bonds before you start investing in them. Not understanding these things may cause you to purchase the wrong bonds, at the wrong maturity date.

The three most important things that must be considered when purchasing a bond include the par value, the maturity date, and the coupon rate.

The par value of a bond refers to the amount of money you will receive when the bond reaches its maturity date. In other words, you will receive your initial investment back when the bond reaches maturity.

The maturity date is of course the date that the bond will reach its full value. On this date, you will receive your initial investment, plus the interest that your money has earned.

Corporate and State and Local Government bonds can be 'called' before they reach their maturity, at which time the corporation or issuing Government will return your initial investment, along with the interest that it has earned thus far. Federal bonds cannot be 'called.'

The coupon rate is the interest that you will receive when the bond reaches maturity. This number is written as a percentage, and you must use other information to find out what the interest will be. A bond that has a par value of $2000, with a coupon rate of 5% would earn $100 per year until it reaches maturity.

Because bonds are not issued by banks, many people don't understand how to go about buying one. There are two ways this can be done.

You can use a broker or brokerage firm to make the purchase for you or you can go directly to the Government. If you use a brokerage, you will more than likely be charged a commission fee. If you want to use a broker, shop around for the lowest commissions!

Purchasing directly through the Government isn't nearly as hard as it once was. There is a program called Treasury Direct which will allow you to purchase bonds and all of your bonds will be held in one account, that you will have easy access to. This will allow you to avoid using a broker or brokerage firm.

Is the recession really over?  Here is a very interesting article I caught making a pretty good case. 

The United States and the world are in the early recovery stages after a major recession. That is certainly not new information, the government spokespeople have been trying to convince the public the recession was over even as the economy was still falling. All major indicators are beginning to indicate the direction has reversed and the painful economic collapse has become a slow and tedious recovery. As we emerge from the recession it is time for some post recession evaluation. The climb out of this economic hole is a fragile process and subject to stumbling blocks along the way. The depth of this recession means the recovery will be slower than most historical recovery cycles.

The pain of a recession is felt differently at different levels of society. Those companies, countries and people who were weakest before the collapse will suffer the worst and longest. Well managed companies, countries with sound internal economies and people with fall back resources will recover quickly. Less well prepared entities will have long and painful recoveries. Some people at lower economic levels will never recover from the personal effects of the recession. These most directly effected people must not be left out of any post recession evaluation

Economics is a "soft science" to a certain extent. Unlike hard science where the rules are well established and everyone accepts the same standards, economics has a large opinion-based component. Economists commonly disagree on cause and effect factors. Their opinions are often influenced by individual focus. Some economists look at a global economy while others see only national economies. Very few economists are willing to look at the economic plight and the economic influence of the street-level consumer. Consumers feel the pain of recession more acutely. Many macro-economists fail to remember that any economic recovery must be supported by consumer spending or it can sputter to a halt.

An economy does not exist solely in the bank accounts of top banking executives or in the stock market. The economy has its foundation in consumer spending. Without the continued growth of consumer spending a recovery can sputter to a halt. When consumer confidence supports increased spending the economy will flourish. The stock market and the government together cannot match the positive influence of an energetic consumer base.

There are two major philosophical differences concerning the government's manipulation of an economic recovery. Both of these concepts have some validity and both have some flaws. One side believes the better approach is to promote business investment to drive economic growth. Another side of the argument believes promoting consumer spending is the most effective way to influence the economy. Years of statistics and research still leave the question unanswered. The proper application of both approaches is the best answer. The proper balance of supply-side and demand-side influences by the government requires research and planning.

In this most recent recession the economy was falling precipitously and immediate steps were needed to halt the decline. It was not possible to spend several months in research and planning before acting. Now that the recovery has begun there is a need to do some research and planning. Adjustments are needed to correct for inflationary pressures caused by deficit spending. It is important that adjustments are well thought out and openly explained to the public. Consumer confidence is bolstered by a government with a workable plan. It is important that the public regains respect for the government.

When the members of the government use the media to bash each other personally and use hyperbole to describe their opposition to policies the net effect is an erosion of confidence in the government as a whole. Disagreements are valid. Such disagreements should be discussed with mutual respect and a willingness to find a workable middle ground. This cooperation is an important component in the post recession evaluation.

Bickering like six-year-olds is not the way to gain respect and confidence. Mature and intelligent discussion with a common goal is a much better way to improve the economy. Publicly acknowledging differences and showing a serious effort to work out an effective approach will dramatically improve consumer confidence.


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Depending on the type of investing that you plan to do, you may need to hire a broker to handle your investments for you. Brokers work for brokerage houses and have the ability to buy and sell stock on the stock exchange. You may wonder if you really need a broker. The answer is yes. If you intend to buy or sell stocks on the stock exchange, you must have a broker.

Stockbrokers are required to pass two different tests in order to obtain their license. These tests are very difficult, and most brokers have a background in business or finance, with a Bachelors or Masters Degree.

It is very important to understand the difference between a broker and a stock market analyst. An analyst literally analyzes the stock market, and predicts what it will or will not do, or how specific stocks will perform. A stock broker is only there to follow your instructions to either buy or sell stock... not to analyze stocks.

Brokers earn their money from commissions on sales in most cases. When you instruct your broker to buy or sell a stock, they earn a set percentage of the transaction. Many brokers charge a flat 'per transaction' fee.

There are two types of brokers: Full service brokers and discount brokers. Full service brokers can usually offer more types of investments, may provide you with investment advice, and is usually paid in commissions.

Discount brokers typically do not offer any advice and do no research - they just do as you ask them to do, without all of the bells and whistles.

So, the biggest decision you must make when it come to brokers is whether you want a full service broker or a discount broker.

If you are new to investing, you may need to go with a full service broker to ensure that you are making wise investments. They can offer you the skill that you lack at this point. However, if you are already knowledgeable about the stock market, all you really need is a discount broker to make your trades for you.

I have been doing a lot of reasearch lately on how best to put some money back to work.  It looks like ETF's have come quite a long way in the last year or so.  I wanted to share this article with everyone written by a Harvard grad.  Hope it helps.

If you are interested in investing in commodities than you can invest in a commodity mutual fund! Many people are not aware that commodities as an asset class has a lot of potential especially in the 21st century. It is being predicted that the 21st century belongs to the commodities.

There are many mutual funds that invest in commodities. Just visit the Morningstar site and you can get the list of such mutual funds that invest in commodities. Just buy the shares of the commodity mutual fund and let its NAV appreciate before you can sell for a capital gain. This is the simplest way for you to get involved in investing in commodities as the mutual fund portfolio management will be done by a professional manager and you have to do nothing. But are mutual funds the best investment vehicles for your wealth building objectives.

There is another investment vehicle that is really hot right now with the public. ETFs started off some three decades back but became highly popular as investment vehicles in such a short time. Now, you must have heard about the Exchange Traded Funds (ETFs). ETFs are really hot investments these days. There are a number of ETFs that invest in commodities.

Now the good thing about investing in ETFs is that they give you the diversification benefits of a mutual fund with very low fees something like 0.7% as compared to 2-4% of the mutual fund. Driven by the growing demand of commodities by the investors many financial institutions are now offering Commodity ETFs.

ETFs have the added benefit of being able to trade like stocks giving you the powerful combination of diversification and liquidity. So unlike a mutual fund whose net asset value is calculated at the end of the day and the shares of mutual fund cannot be traded during the day, you can go both long or short on ETFs all the time. Something you cannot do with a mutual fund!

Now, you can find thousands of ETFs in the market on different market sectors, stock indexes, currencies, commodities and so on. This diversification plus liquidity benefit makes an ETF a better investment tool as compared to the mutual fund and the stocks.

Let's take an example of a commodity ETF. The Deutsche Bank Commodity Index Tracking Fund is listed on AMEX and tracks the Deutsche Bank Liquid Commodity Index. This index is based on a basket of six commodities: light sweet crude oil, heating oil, gold, aluminum, corn and wheat. The first Commodity ETF in US was launched by Deutsche Bank in the start of 2006. This ETF is based on the Deutsche Bank Commodity Index and as you can judge

Now, every month a new ETF gets launched. There are a number of Commodity ETFs that track individual commodities like crude oil, gold and silver. Do your research on Commodity ETFs, you may find a good investment. This ETF invests directly in the commodity futures contract. Now one of the downsides of investing in this Commodity ETFs is that it can be fairly volatile as it is based on commodity futures contracts that get rolled monthly. Another downside to this Commodity ETF is that it is based on a basket of six commodities only.


Mr. Ahmad Hassam has done Masters from Harvard University. Trade Dow Futures . Learn Commodity Trading !

So for the last few weeks everywhere I turn I am hearing that we will not have to worry about inflation for quite awhile.  I have heard from some pundits that we are looking at a couple of years before we need to worry.  Still others believe that the FED will be able to take away the punch bowl in time to stop inflation from taking off.  I just do not believe that will happen.  I think the FED will be behind the curve as it always seems to be.  They will not risk raising rates too early as that will cause the market to tank which will kill consumer confidence again.  Quite the feedback loop.  It all seems like one giant con game at this point. 

None other than Warren himself sees massive inflation in the future.  I read an article on moneynews were the Oracle said specifically that due to the enormous nature of the debt we are accumulationg the only way out is through massive currency inflation.  Here is a quote from him:

“A country that continuously expands its debt as a percentage of GDP and raises much of the money abroad to finance that, at some point, it’s going to inflate its way out of the burden of that debt,” Buffett said.

Experience proves that, he points out.

“Every country that has denominated its debt in its own currency and has found itself with uncomfortable amounts of debt relative to the rest of the world, in the end they inflate,” Buffett explains.

“That becomes a tax on everybody that has fixed dollar investments.”

I have seen alot in my time including the debacle of the 70's and I think we are heading for something a little more shocking this time around.  I wonder if Warren is wishing he didnt sell all of that silver he held a few years ago.  If I remember correctly he would have about a triple bagger based on today's price.