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Premium bonds |
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Premium bondsSee: 'National Savings'.Similar MatchesTender offer premiumTender offer premiumThe premium offered above the current market price in a tender offer. Term premiumsTerm premiumsExcess of the yields to maturity on long-term bonds over those of short-term bonds. Equity risk premiumEquity risk premiumThe concept that justifies investment in stocks, where your capital is at risk, rather than gilt-edged bonds which are as safe an investment as you can get and where your capital is not at risk provided you hold the bond til maturity.The theory goes that it is only worth investing in stocks if the return you get exceeds the return you could get on gilts - otherwise, why would you take on the extra risk? The difference in returns is known as the equity risk premium.Every historical analysis of returns achieved by stocks compared to bonds shows that stocks outperform bonds in the long term. This is why you repeatedly hear pundits say that the stock market, while risky in the short term, is not risky in the long term. The key thing, as a private investor, is to leave your money in the market for long enough for the long term benefit to eradicate the short term risk. Stick your money in the market for two months, and it might go down 20% if you are unlucky. Stick it in a well-diversified portfolio for 30 years, and it should produce returns that comfortably exceed what you could have got from bonds. PremiumPremiumIn the context of insurance, a premium is the regular sum you pay to keep your cover in force. Risk premium approachRisk premium approachA common approach for tactical asset allocation to determine the relative valuation of asset classes based on expected returns. Further SuggestionsUnamortized premiums on investmentsOption premium Liquidity premium Indemnity Guarantee Premium option premium Conversion premium Percentage premium Single premium life insurance Waiver of premium High premium convertible debenture Insurance premium insurance premium Bond premium waiver of premium Call premium Fixed premium Premium income life assurance premium relief warrant premium premium Risk premium Forward premium Default premium Forward premium Risk premium |
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