In our distressed economy, many families are struggling to find the best way to invest their money with very little risk. Buying bonds has become increasingly popular in the United States in recent years and can be particularly beneficial to you if you have immediate financial need in which you want to see a secure return in less than five years.
Bonds, as a whole, outperform stocks in a 2-year to 5-year period. It is for this reason that many short term investors make the decision to invest in buying bonds rather than invest in the purchase of individual stocks. Even for families who desire to purchase a home, and struggle with issues related to a Torrens title in their state, the buying of bonds helps to alleviate some financial distress and work towards a short term financial real estate goal.
During a recession, as we are experiencing in the United States, families find their bonds outperform their individual stock purchases and also outperform even long term bonds. So, if you are looking to get a return on your money, for the purchase of buying a home in the next five years, the purchase of short term bonds may be the way to go.
As with any financial investment, it is important to consult with a financial advisor to determine what type of investments are best for your family. While some financial investors may aggressively recommend the purchase of certain mutual funds or individual stocks, be sure they are also weighing those options against bonds. Short term bonds, more than long term bonds, can help you reach your goal of purchasing a home, in much safer environment than investing in risky stocks.
As the economy begins to improve, and the recession begins to subside, your investor can provide more alternatives for investing. But, during a recession, when short term money goals are at stake, always invest in short term bonds as they seem to hold the greatest option for a return on your money.
Sources: All About Bonds, Bond Mutual Funds, and Bond ETFs, by Esme Faerber