Liquidity
Generally, bonds are more liquid (how easily an investment can be turned into cash) than some other investments, like mutual funds, because an investor can easily buy or sell bonds at prevailing market prices.
Steady returns
Bonds can provide a steady stream of returns over the life of the bond, which can help you meet your financial goals with a high degree of predictability.
Less Risk
Bonds are typically less volatile and less risky than stocks. They offer a higher level of capital preservation (the original value of your investment or sum of money), making them a suitable choice for the risk-averse looking to safeguard their principal investment.
When you purchase a bond, you can simply collect the interest payments while waiting for it to reach maturity (the date the bond issuer has agreed to pay back the bond’s face value).
Another option is to trade bonds. Once a bond is issued, its value can go up and down similar to a stock. If you keep the bond until it reaches its maturity date, you'll receive the agreed-upon interest payments, and the face value won't change. However, if you choose to buy and sell before maturity, the price you get may not be the same as the face value. It can fluctuate, and this is an important factor to consider when dealing with bonds.
Many often wonder what the difference between a bond and a stock is. Let’s discuss! Bonds and stocks are both issued by companies, however, bonds don’t give you any ownership rights, whereas stocks do. Bonds also involve less risk than stocks because they don’t rely on the company’s growth or if they’re not doing well. As long as the company has the resources to stay current on its loan, the bond is secure. Finally, bonds have organizations that rate the quality of the bond, while stocks do not.
An RRSP is a government-registered retirement savings plan that offers tax benefits today by reducing your current income tax, and it allows your money to grow tax-free until retirement when you'll likely be in a lower tax bracket. It's a smart step for your financial future.
If you're 18 or older in Saskatchewan and have a valid social insurance number (SIN), the TFSA is your gateway to saving and earning money without the burden of taxes. With a TFSA, your contributions and the income you generate within the account are tax-free, even when you decide to make withdrawals. It's a lifelong opportunity to grow your wealth while keeping more of what you earn.
At Conexus, we have a range of investment accounts designed to help you achieve your financial goals. Explore the benefits and differences of popular accounts like a TFSA, RRSP, RESP, and more.
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