What is a Corporate Bond?

A corporate bond is a type of bond issued by corporations to raise capital. When you buy a corporate bond, you are essentially lending money to the corporation for a set period of time. In return, the corporation promises to pay you periodic interest payments, called coupon payments, and return the principal amount at the end of the bond's term, known as maturity.

Corporate bonds can have varying interest rates, depending on the creditworthiness of the issuing corporation and prevailing market conditions. Many corporate bonds can be fixed-rate bonds too.

Corporate bonds offer several benefits for both investors and the issuing companies:

• Fixed Income: Corporate bonds provide a fixed income stream through regular interest payments (coupon payments) to bondholders. This fixed income feature can be attractive for investors seeking stable returns.
• Preservation of Capital: Corporate bonds are generally considered less risky than stocks, especially if they are issued by financially stable companies. They offer a more predictable return of principal at maturity compared to stocks, which are subject to greater market volatility.
• Potential for Higher Returns: While corporate bonds are generally less risky than stocks, they typically offer higher returns than government bonds or other fixed-income securities with lower credit risk. This potential for higher returns can attract investors seeking to earn more than what traditional fixed-income investments offer.
• Market Liquidity: Most corporate bonds are actively traded on secondary markets, providing investors with liquidity if they need to sell the bonds before maturity. This means investors can buy and sell bonds relatively easily, although pricing can vary depending on factors such as the bond's issuer, maturity, and prevailing market conditions such as interest rates fluctuations.
• Credit Quality Options: Investors can choose corporate bonds with varying credit qualities to suit their risk preferences. Investment-grade bonds issued by highly rated companies tend to have lower default risk but offer lower yields, while high-yield bonds issued by lower-rated companies offer higher yields but come with higher default risk.

Overall, corporate bonds can play a valuable role in a diversified investment portfolio by providing income, preserving capital, and offering potential for some capital appreciation while managing risk.

People can purchase corporate bonds through various channels:  Brokerage Firms, Financial Advisors, Bond Mutual Funds and ETFs, Directly from Issuers, Secondary Market, and Online Bond Marketplaces.

What makes Worthy Bonds Different?

Here are some key features that set Worthy Bonds apart:

• Accessible to Small Investors: Worthy Bonds allow investors to participate in the fixed income market with as little as $10. Worthy’s low minimum investment threshold makes it accessible to a wide range of investors, including those who may not have large sums of money to invest.
• Fixed Interest Rate: Like many corporate bonds, Worthy Bonds offer a fixed interest rate (_xx% per year) that provides investors with predictable returns on their investment. However, unlike corporate bonds, the value of your Worthy Bond does not fluctuate with market conditions.
• Liquidity: Worthy Bonds can be redeemed at face value at any time without penalties, providing investors with liquidity and flexibility. Hence, the value of a Worthy Bond does not decrease during poor market conditions.
• Asset-Backed Bonds: Worthy Bonds are backed by a portfolio of secured community real estate assets. Because Worthy’s real estate loans have a conservative loan-to-value rate (between 55% and 65%), they provide an additional layer of protection for bondholders.
• Support for First Time Homeowners: By investing in Worthy Bonds, investors indirectly support first time homebuyers as some of the bond sales proceeds are lent to homebuilders. This community investing aspect may appeal to investors looking to make a positive impact with their investment dollars.
• Automated Investing: Worthy Bonds offers an automated investment feature that allows investors to set up recurring investments, making it easy to contribute to their bond portfolio regularly.
• Roundup Investing: Worthy’s Round-up App allows investors to purchase bonds by rounding up their daily purchases and investing the spare change. This mechanism enables all individuals to gather and grow their nest eggs - even those who don’t have idle cash available to invest.
• Easy and Secure Account Set-up: No need for a broker-dealer or to open an account with the government's Treasury Department. Also the Worthy platform employs robust security measures to protect customer's funds and personal information. 

Overall, Worthy Bonds offer a simple and accessible way for investors to earn an attractive yield. Its unique combination of features, including low minimum investment, fixed interest rate, secured asset-backed bonds, spare change roundups, and no-fee liquidity, makes it an attractive option for investors seeking a different approach to fixed-income investing.

Learn more about Worthy Bonds Today!