Bond Calculators

Crunch a few numbers for bond calculations before investing

Investors tap bond calculators, including a savings bond calculator, bond amortization calculator or bond duration calculator, to gauge how a particular bond should perform from purchase until maturity. Bond valuation calculators help determine which type makes the most sense for a house or business down payment, funding college or growing a nest egg. A bond is an IOU to an investor from a company, such as General Electric, or from the U.S. Treasury or the city of Los Angeles. These IOUs vary from short-term loans of a few weeks to 30 years and beyond. Most pay fixed or floating-rate interest then return the principal to the lender (the investor) at maturity.

Bond calculators determine: Is a particular bond too expensive to earn its holder a respectable return over time? Is a taxable bond’s payout enough to top a comparable municipal bond's tax-free yield? Consider these points:

1. Investment goals determine type of bond calculators.

2. Mastery of bond terms to input correct data: price, yield, coupon, maturity date, duration, convexity and cash flow.

3. Investment websites and government agencies offer bond calculators, often at no cost.

 

Define your investment needs before calculating bonds

Determine on your own or with the help of a money manager or adviser just how much of your investing funds should go to fixed-income instruments, generally referenced as bonds, but including bonds, notes, bills, corporate debt, mortgage-backed debt and other investments. Investment needs are based on age and tax bracket and the need for periodic income.
Try: It may be the lobbying arm of Wall Street’s large bond dealing investment banks, but the Bond Market Association offers user friendly educational tools for individual investors too. Find easy-to-digest investment product descriptions and advice on Investorguide. Catch free real-time financial news and analysis from MarketWatch and Yahoo Finance.

Learn a new language - try bond-ese

Whether you're a veteran or neophyte investor, grasping the fundamentals of the bond market will help you keep up with what your investment adviser is talking about or elevate your own self-directed investing. Interest rates are a pretty easy concept to digest, but bond convexity, as just one example, may require a bit more brushing up.
Try: Keep complex terms at your fingertips with the Investorwords or Investinginbonds glossaries.

Find your online bond calculator

Go online for complimentary general-purpose bond calculators and taxable versus tax-exempt yield equivalent calculators. You may also specialize any search using, bond amortization calculator or bond duration calculator. For highly skilled investors and professional money managers, bond derivative calculator software can be purchased online and through outlets that sell complex math calculator software. Many offer a free trial.
Try: Even subscription Web sites like mutual fund research firm Morningstar include a few complimentary offerings like bond calculators. Tap investment firms that specialize in bond investments for an online bond calculator or a bond derivative calculator. For calculating savings bonds values, use government resources at TreasuryDirect for savings bond calculators and other tools.

 

• Bond calculations are a relatively simple way to determine the payout on a an investment, but should never be used exclusive of other risk considerations, including an individual's own investing needs.

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