Zero coupon bonds do not offer ongoing interest as with other traditional investment programs. Instead, you buy the bonds at a deep discount and hold them over a period, usually several years. When they mature, they are worth the face value of the bond. These bonds work especially well when you need a certain sum of money at a certain time in the future, such as to expand your business or replace expensive equipment.

The good news is that you know for sure how much you will get when you invest in zero coupon bonds. The bad news is you may have to pay tax on interest you did not receive yet. Inflation may take a large chunk out of your earnings also, so keep that in mind. Look at the following and get zero coupon bonds training before you buy:

1. Locate a zero coupon bonds consultant from whom to buy your bonds.

2. Get zero coupon bonds advice on which bonds offer tax deferred savings.

3. Find zero coupon bonds information on bonds that offer liquidity.

Action Steps
The best contacts and resources to help you get it done

Buy bonds from a zero coupon bonds consultant who will answer your questions

Buy corporate, municipal or government zero bonds. Make sure you find out if you are responsible for paying federal taxes and whether you may have to pay state and local taxes as well. Pick a term that works for you. Usually, zero bonds come with a term from one to 40 years, so if you need the money for a future project, time the term to come due for your project.

I recommend: Ameriprise offers zero coupon bonds. Pick your period and investigate the terms of the bonds. FMS Bonds offers several programs that include zero coupon bonds within the package. Select the program that corresponds with your goals. The list that they are currently selling will populate on the next screen when you press "zero bonds" and submit.

Purchase zero coupon bonds that offer tax deferred options

Check with brokers who sell zero bonds that are tax deferred. This means you do not pay any federal tax until your bond matures. You may still be liable for state and local taxes on these bonds, so consult your accountant or tax attorney about these liabilities.

I recommend: Prudential offers zero coupon bonds with advice to hold these in a tax-deferred account to avoid federal tax on the interest you have not yet received. Ask the representative for full details on the bonds they offer. Bradford Financial Group offers zero coupon bonds with tax-deferred options. Choose the terms for the right investment for your business.

Ask for help with zero coupon bonds that offer liquidity

Zero bonds are meant to be held until maturity. There can be severe penalties for cashing them out before maturity, including loss of principal. Look for bonds that you can cash at any time if you suspect you may need the funds before maturity. There are still risks in planning to sell these bonds before maturity, since you will be selling in a secondary market.

I recommend: David Lerner Associates offers zero bond with liquidity. These zero coupon municipal bonds do not require you to pay ongoing interest, and if you did need to cash out before maturity, it is possible to do so. EdwardJones offers zero bonds with liquidity. Check the terms of the investment before you buy.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Check the prospectus on the zero coupon bonds that you plan to buy. Make sure you know the terms before you invest your money.
• •  Buy insurance for your zero coupon bonds investment. In the unlikely event the corporation goes bankrupt during the term of your investment the insurance will guarantee to return at least your initial investment.