Have you received an InvestorKeep alert letting you know you have received a bond coupon payment? Great News! You have been paid!
A coupon is a payment made to you as the owner of a bond. Buying the bond in the beginning was a business transaction. You gave them money and in return, they agreed to pay you back in a set amount of time with a set amount of interest. These interest payments come in the form of coupon payments, typically paid semiannually or twice a year. This is why bonds are considered part of the “fixed income” category of investments.
What do you do with your coupon payment? It may be set up to pay you just like paycheck. Collecting income from investments is often part of a financial plan. You may also reinvest the funds Talk with your financial professional about the best way to invest your coupon payment. Constantly reinvesting the money allows you to compound the interest: adding to the principal and gaining increased interest. As Albert Einstein famously said: “Compound interest is the most powerful force in the universe.”