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What I Learned As An Investor: Bonds Vs. Mutual Funds
As an investor with more than 30 years of experience, there’s a lot I can say about earning a living on passive income. But for now, let’s focus on two different concepts: Mutual funds and bonds, which allow investors to spread their risk over lots of investments.
A mutual fund pools a group of investors’ money over many bond investments, while an individual bond allows an individual investor to purchase.
Bonds are used to help corporations finance projects similar to a loan. It is required of those companies to pay back investors who helped pay for those individual bonds.
Mutual funds are a little bit more complicated in that they are not the same as stocks. Investors pool their money together to buy a collection of assets such as stocks, bonds, or other securities.
It’s important to learn what the key differences are to spread your wealth to achieve your goals.
Bonds
According to Fidelity, “The investor, or bond buyer, generally receives regular interest payments on the loan until the bond matures or is “called,” at which point the issuer repays you the principal.
That interest rate can change depending on the rate of the bonds. The higher-rated the bond the lower the interest rate and vice…