What Are Secured Investment Accounts

What Are Secured Investment Accounts

Secured investment accounts, also called secured investment contracts, are a new kind of investment that investors are only just beginning to take advantage of. These accounts are actually corporate bonds sold by companies that offer an extremely high rate of return with little risk.

Purpose

The reason corporations sell corporate bonds is to raise cash from the public. Bonds are considered a debt by a corporation, and in the event of business failure bondholders are one of the first creditors reimbursed.

Bonds
Secured investment accounts are simply bonds sold by a corporation. A bond is a legal agreement and therefore contains a low risk because the corporation is legally responsible for paying the bondholders back.

Offers

What these bonds offer is a coupon rate. Each year the corporation pays the bondholders the stated coupon rate of the bonds. The bondholder therefore is guaranteed a payment each year. Bonds also have expiration dates. When the bonds expire, the company is legally responsible for paying the full amount of principal back to the bondholder. Some bonds are short-term, while others can have longer dates of up to 30 or 40 years.

Benefits
Secured investments offer a very high rate of return, sometimes as high as 181 percent, according to the website Stock Gumshoe. Another benefit is that the stated coupon rate on the bond never changes. People choose to invest in secured investment accounts because no matter what happens to the stock market, bondholders of these investments are guaranteed payment.

Source: eHow