An investor has earned additional Income and is looking to invest in a security that guarantees returns over. The next seven years. What is the Best option for purchase?
Provincial savings bonds are a suitable option for an investor seeking a guaranteed return over a fixed period, such as seven years. These bonds are backed by the credit of the issuing provincial government and provide a stable and secure investment, ensuring predictable returns. They are often issued during specific sales campaigns and offer safety comparable to federal bonds but tailored to provincial residents.
Other options:
Preferred shares: Provide fixed dividends but do not guarantee returns.
Common shares: Subject to market risk and do not offer guaranteed returns.
Exchange-traded funds (ETFs): Can track bonds or equities but are subject to market fluctuations and do not guarantee returns.
References:
Volume 1, Chapter 6:Fixed-Income Securities, section on "Provincial and Municipal Bonds" explains the features and security of provincial savings bonds​.
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