June, 2010
Volume 3, Issue 6
In This Issue
MFG FINANCIAL DISPATCH
A Monthly Publication of MacIntosh Financial Group Ltd.
Celebrating 25 Years of Serving Our Clients
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Win One of Two $25 Starbucks Cards
Bits and Pieces
Two $25 Starbucks Cards To Be Won
Just so you know, the odds of winning are pretty good and several past winners have won more than once. This month we’re giving away a $25 Starbucks card to each of two lucky people.
Last month we had two repeat winners: Chris Stewart and Frank Schindelka. Congratulations once again to you both.
If you would like to be one of
our winners this month, simply click on the word “WIN”,
and answer the four two multiple choice questions based on
information in the articles in this newsletter. We’ll randomly draw two
names from the correct entries and award a card to each of those two
people.
This month’s draw will happen on June 28th. All the best!
Investment Basics - Bonds
In last month’s issue we looked at the basics of investing in equities or stocks. This month we’re going to do the same with bonds.
What is a Bond?
Companies and governments offer bonds to raise money. A bond is a contractual obligation to pay a debt. When you buy a bond, you are lending your money to a company or a government for a set period of time – anywhere from a year or less to as long as 30 years. The bond issuer promises to pay a specific amount of interest on specific dates for a specific length of time, and to repay the debt upon maturity. Because of this, bonds are often referred to as “fixed income” investments.
Risks
As with every type of investment, there are advantages and risks involved in investing in bonds. The shorter term risks and volatility tend be lower than that of stocks but generally bond investments are not considered short-term. Although the interest rate is set for each bond until maturity, changes in general interest rates will affect the value of the bonds.
If a company that issued a bond goes bankrupt, bondholders are creditors of the company so if there are assets to be sold, the bondholders will share in the proceeds. As a bondholder there is less risk of losing all of your money than there is if you own stock in the company.
Ways to Buy Bonds
Bonds are bought and sold on secondary markets at anytime between the issue date and the maturity date. The price is determined by the interest rate on the bond in comparison to current interest rates as well as the perceived financial strength and stability of the bond issuer. When a bond is sold prior to maturity, the seller could either realize a capital gain if sold for more than its cost or a capital loss if sold for less than its cost.
Bonds can be purchased directly but they are more often purchased by individual investors through mutual funds – either bond funds or balanced funds which hold a combination of stocks and bonds. In a mutual fund the managers buy and sell bonds, normally with varying maturity dates, depending on an assessment of the direction of interest rates and the quality of the issuers.
Perhaps the greatest advantage to holding bonds in your portfolio is that they don’t tend to correlate very closely with stocks. So by owning both stocks and bonds you get the advantage of diversification which will generally reduce the overall volatility of your portfolio.
If you have questions or would like more information about investing in bonds, please contact us.
Bits and Pieces
MRS Trust Administration Fees
At the beginning of June each year, MRS Trust takes their annual fee. You may have received a notice in the mail confirming the sale of units from one of your mutual funds. The confirmation may or may not say on it “redemption for fee”. To view the fee schedule click here.
Funny Video
For a two minute cynical but quite humorous look at Europe’s current financial woes, click here.
Thank You:
We want to thank all of our clients who have recommended us to their friends, family members and co-workers over the first half of this year. We don’t take those recommendations lightly and we will always strive to do a good job to live up to your endorsement of us. We really do appreciate it and consider it the highest compliment so once again, thank you.
In 2010 we are celebrating our 25th Anniversary of serving our clients. For 25 years we have been providing financial advice and products to some of the finest people we know. We really do appreciate you and we look forward to continuing to serve you for many years to come!
MFG Financial Dispatch is our monthly email newsletter designed to keep you up to date on timely financial issues that may affect you and to pass on timeless information and advice regarding financial issues. Archived issues are available in the Client Centre on our website (macintoshfinancial.com).
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Our website address is macintoshfinancial.com . If you are on your smart phone you can also find our contact information on our “.Tel” page at macintoshfinancial.tel.
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