39:["$","$L3a",null,{"category":"$3b","relatedArticles":[{"id":"cG9zdDoyNzY0ODk=","databaseId":276489,"postId":276489,"author":{"node":{"id":"dXNlcjoz","databaseId":3,"userId":3,"avatar":{"url":"https://secure.gravatar.com/avatar/47938df052bf0a5283bd6b77ab786737?s=96&d=mm&r=g","size":96,"__typename":"Avatar"},"description":"SmartAsset employs a team of writers and editors with years of experience in the editorial, news and personal finance industries. Some staff members also hold the Certified Educator in Personal Finance (CEPF®) designation from the Institute for Financial Literacy.","additionalMeta":{"expertise":null,"__typename":"User_Additionalmeta"},"email":null,"firstName":"Michael","fullName":"SmartAsset Team","lastName":"Carvin","name":"SmartAsset Team","postCount":{"pageInfo":{"offsetPagination":{"total":1623,"__typename":"OffsetPaginationPageInfo"},"__typename":"UserToPostConnectionPageInfo"},"__typename":"UserToPostConnection"},"slug":"mcarvin","__typename":"User"},"__typename":"NodeWithAuthorToUserConnectionEdge"},"categories":{"nodes":[{"id":"dGVybToxOTQ5MQ==","children":{"nodes":[],"__typename":"CategoryToCategoryConnection"},"databaseId":19491,"categoryId":19491,"link":"https://smartasset.com/beginner-investing/articles","name":"Investing for Beginners","postCount":{"pageInfo":{"offsetPagination":{"total":588,"__typename":"OffsetPaginationPageInfo"},"__typename":"CategoryToPostConnectionPageInfo"},"__typename":"CategoryToPostConnection"},"slug":"beginner-investing","ancestors":{"nodes":[{"name":"Investing","slug":"investing","__typename":"Category"}],"__typename":"CategoryToAncestorsCategoryConnection"},"parent":{"node":{"name":"Investing","id":"dGVybTo1MzE4","slug":"investing","__typename":"Category"},"__typename":"CategoryToParentCategoryConnectionEdge"},"__typename":"Category"}],"__typename":"PostToCategoryConnection"},"content":"$3c","date":"2025-02-07T16:26:16","excerpt":"

Bearer bonds are a type of unregistered fixed-income securities that provide ownership rights to whoever physically holds them. Unlike traditional bonds, bearer bonds do not require the holder to be listed in any records, making them transferable through simple possession. These bonds were popular in the past because they provided anonymity. Nowadays, they are rare […]

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His freelance \r\nbyline has appeared on CNBC.com and in The Wall Street Journal, The New York Times, The Washington Post, Kiplinger’s Personal Finance and other leading publications. Mark has written books including, “Not Just A Living: The Complete Guide to Creating a Business That Gives You A Life.” His favorite reporting is the kind that helps ordinary people increase their personal wealth and life satisfaction. A graduate of the University of Texas journalism program, he lives in Austin, Texas. In his spare time he enjoys reading, volunteering, performing in an acoustic music duo, whitewater kayaking, wilderness backpacking and competing in triathlons.","additionalMeta":{"expertise":null,"__typename":"User_Additionalmeta"},"email":null,"firstName":"William","fullName":"Mark Henricks","lastName":"Henricks","name":"Mark Henricks","postCount":{"pageInfo":{"offsetPagination":{"total":809,"__typename":"OffsetPaginationPageInfo"},"__typename":"UserToPostConnectionPageInfo"},"__typename":"UserToPostConnection"},"slug":"mhenricks","__typename":"User"},"reviewedBy":{"id":"dXNlcjoxNDQ=","databaseId":144,"userId":144,"avatar":{"url":"https://secure.gravatar.com/avatar/e1f3d3a0e571088b1ba1f56a767f73d3?s=96&d=mm&r=g","size":96,"__typename":"Avatar"},"description":"Brandon is a Certified Financial Planner™ (CFP®), Retirement Income Certified Professional (RICP) and Enrolled Agent (EA) with more than 10 years of experience as a financial professional. 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","

A financial advisor can help you assess the risks and benefits of different financial investments for your portfolio.

","

What Are Bearer Bonds?

","

Bearer bonds are debt instruments that differ from traditional bonds in how they are owned and redeemed. Registered bonds, a more common type, record ownership with a central authority or issuer. Bearer bonds, in contrast, are unregistered.

","

Ownership of bearer bonds is tied solely to possession. That means whoever holds the physical bond certificate has the right to collect its interest payments and redeem its value at maturity.

","

Each bearer bond typically comes with physical coupons attached, which the holder must physically present to claim interest payments. These coupons are detached and submitted to the issuer or a designated paying agent for redemption. The bond certificate itself must be redeemed to receive repayment of the principal amount once the bond matures.

","

The anonymity of bearer bonds made them attractive in the past, particularly for those seeking privacy in financial transactions. However, this same feature has led to their decline, as governments and regulatory bodies worldwide have raised concerns about their use in tax evasion, money laundering and other illicit activities.

","

Today, bearer bonds are largely a historical financial product. There continues to be some limited issuance in a few jurisdictions, however, with stringent rules governing their use.

","

History of Bearer Bonds

","

Bearer bonds emerged in the late 19th century as a convenient and anonymous way for investors to hold debt securities. Their popularity grew during the early 20th century, particularly in Europe and the United States, as they offered flexibility and privacy.

","

Unlike registered bonds, which required detailed ownership records, bearer bonds allowed individuals to transfer wealth discreetly through physical possession. This feature made them appealing for international transactions and estate planning. The anonymity of bearer bonds, once an advantage, has become a liability in today’s regulatory environment.

","

During the mid-20th century, bearer bonds became a standard financial instrument for governments and corporations to raise capital. However, their unregulated nature also attracted misuse, including tax evasion and illicit financing.

","

By the 1980s, concerns over these activities led to increased scrutiny and stricter regulations. The U.S. government began phasing out bearer bonds in 1982 through the Tax Equity and Fiscal Responsibility Act (TEFRA), effectively halting their issuance domestically. Today all U.S. Treasury marketable securities are issued electronically.

","

Governments and financial institutions now prioritize transparency to combat money laundering and tax evasion. Without ownership records, it is difficult to ensure compliance with financial laws. As a result, most modern financial systems rely on registered securities that tie ownership to an individual or entity.

","

Where Can You Still Invest in Bearer Bonds?

","

","

While bearer bonds have largely disappeared in many countries due to regulatory changes, they are still issued and traded in select jurisdictions, though opportunities are limited. Some countries, including Switzerland and Luxembourg, have continued to allow certain types of bearer securities under specific conditions.

","

Additionally, bearer bonds may occasionally be available through secondary markets, such as private sales or auctions, where individuals or institutions liquidate their holdings.

","

Investing in bearer bonds today typically involves working with specialized financial advisors or brokers who are familiar with the niche market. These professionals can help identify legitimate opportunities and navigate the legal and logistical complexities of acquiring and managing bearer bonds. It’s important to understand the regulatory environment of the country where the bond is issued, as laws governing their use can vary significantly.

","

Purchasers should exercise caution, as the anonymity of bearer bonds can make it challenging to verify their authenticity. Thorough due diligence is necessary to ensure the bond’s validity and confirm that it isn’t subject to legal restrictions or encumbrances.

","

Can You Still Redeem Bearer Bonds?

","

Redeeming bearer bonds is still possible in many cases. Old U.S. Treasury bonds can be redeemed, for example, by sending them to the Treasury Department. Whether a given bearer bond can be redeemed largely depends on the issuer, the bond’s maturity date and the jurisdiction where it was issued.

","

For bonds that have not yet reached maturity, the holder can typically redeem them by presenting the physical bond certificate to the issuing entity or its paying agent. The process involves verifying the bond’s authenticity and ensuring all attached coupons have been redeemed or accounted for.

","

For bearer bonds that have matured, the redemption process can be more complex. Many issuers impose deadlines for claiming principal payments, known as a “prescription period.” If this period has expired, the bondholder may lose their right to redeem the bond. Additionally, some older bearer bonds issued by defunct companies or governments may have no redemption value if the issuer no longer exists or has defaulted.

","

Bottom Line

","

","

Bearer bonds offer a glimpse into financial history, standing out for their unique ownership structure and anonymity. While their issuance has declined due to regulatory concerns, they remain an investment option in niche markets for seasoned investors who understand the risks. For those who still hold bearer bonds, redeeming them requires attention to the issuer’s policies and deadlines.

","

Tips for Investment Planning

","$53","

Photo credit: ©iStock.com/Tom Merton, ©iStock.com/FreshSplash, ©iStock.com/miniseries

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Distressed assets could offer investors high returns at lower upfront costs. Assets like real estate or corporate securities are often undervalued due to financial issues or poor market conditions. While the risks are high, they can be appealing to investors who are prepared to do substantial research and take a strategic approach. A financial advisor […]

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","

A financial advisor can help you determine the pros and cons of investing in distressed assets for your portfolio.

","

What Are Distressed Assets?

","

Distressed assets are investments like properties or securities that have lost value due to financial problems faced by their owners, such as bankruptcy or foreclosure. These assets can often be bought at a discount and may recover over time, offering investors an opportunity to capitalize on future gains.

","

There are two main types of distressed assets:

","

Distressed real estate includes foreclosed homes or commercial properties sold below market value due to the owner’s inability to meet financial obligations. Investors can renovate or reposition these properties for resale or rental income.
Distressed debt includes bonds and loans issued by companies struggling with solvency issues. Investors may buy these at a discount, either betting on the company’s recovery or negotiating better repayment terms.

","

Pros and Cons of Investing in Distressed Assets

","

Investing in distressed assets can bring both high returns and significant risks. Here are three pros and three cons to consider before investing:

","

Pros

","

Discounted prices: Distressed assets are often sold at a fraction of their intrinsic value, providing opportunities for significant returns.
Upside potential: Successful recovery or repositioning of the asset can lead to substantial appreciation in value.
Diversification: Adding distressed assets to a portfolio can provide exposure to unique investment opportunities that may perform differently from traditional assets.

","

Cons

","

High risk: Many distressed assets come with uncertainties, such as legal complications or continued financial decline.
Extensive research: Doing one’s due diligence is imperative to understanding the asset’s true value and risks.
Illiquidity: Some distressed assets, such as real estate or private debt, may take time to sell or generate returns.

","

D.O.V. Method

","

","

The debt, ownership and value (D.O.V.) method helps investors evaluate distressed assets by analyzing the asset’s debt and ownership rights, as well as current and potential values. This can help you assess risks and opportunities by focusing on these three critical factors:

","

Debt

","

High levels of debt may reduce the value of the asset or complicate the recovery process:

","

Debt structure: Identify the types of debt tied to the asset, such as mortgages, liens or corporate bonds. Analyze repayment terms, interest rates and penalties for default.
Negotiation potential: Determine if debt restructuring is possible. In some cases, creditors may agree to reduced payments or extended timelines.
Impact on value: Excessive debt may leave little room for profit after acquisition, so calculate whether the remaining value justifies the investment.

","

Ownership

","

Ownership issues can reveal potential risks and opportunities:

","

Clear title: Verify that the asset has a clean title, free from legal disputes or encumbrances.
Current owner’s situation: Understanding why the asset is distressed – such as financial mismanagement or external market forces – can help you gauge recovery potential.
Stakeholder rights: Assess the rights and claims of other stakeholders, such as creditors or minority shareholders, which may impact your investment.

","

Value

","

The intrinsic value of an asset could help establish whether it’s a worthwhile investment:

","

Current market value: Compare the distressed asset’s price with similar non-distressed assets in the market.
Future potential: Consider the asset’s recovery prospects, including potential uses, renovations or strategic repositioning.
Exit strategy: Define how you plan to generate returns, whether through resale, rental income or debt repayment.

","

How to Find Distressed Assets

","

Finding distressed assets involves locating investments undervalued due to financial issues or market challenges. These include real estate, securities, or businesses facing bankruptcy or foreclosure. Researching market trends and tracking distressed listings helps identify potential opportunities. Here are five general tips to help you get started:

","$66","

Each approach has its own advantages and challenges, so consider combining multiple strategies to find the best opportunities.

","

Bottom Line

","

","

Investing in distressed assets could bring high returns. But, it requires careful analysis, a strategic plan and a tolerance for higher risk. The D.O.V. method, in addition to other resources, can help you identify investment opportunities. Conducting thorough research and consulting a financial expert could help you reduce risk and uncover potential value.

","

Investment Planning Tips

","$67","

Photo credit: ©iStock.com/DeanDrobot, ©iStock.com/blackCAT, ©iStock.com/kupicoo

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Growth investing focuses on companies with strong potential for future expansion, often shown through rising revenue, profits, or market share. These companies may not provide immediate returns through dividends but offer the chance for long-term capital growth. For investors comfortable with higher risk, growth investing can be a way to build wealth. However, like with […]

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","

A financial advisor can help you analyze and manage growth stocks for your portfolio.

","

What Is Growth Investing?

","

Growth investing is a stock-picking strategy that targets companies expected to grow faster than the overall market. These companies often reinvest earnings into their operations rather than distributing them as dividends, aiming to scale rapidly and capture more market share.

","

Growth Investing vs. Value Investing

","

While growth investing emphasizes future potential, value investing focuses on identifying undervalued companies trading below their intrinsic value.

","

Growth stocks often have higher price-to-earnings (P/E) ratios and prioritize reinvestment, which can lead to higher volatility. Value stocks, on the other hand, typically have lower price-to-earnings (P/E) ratios and may offer dividends, providing steady income.

","

For example, a growth investor may seek opportunities in technology or biotech sectors, where innovation drives rapid expansion. Meanwhile, a value investor might target an established company in a stable industry, such as utilities or consumer goods.

","

Growth Investing Strategies

","

There are several strategies investors use within the growth investing framework. Here are four common ones to consider:

","

Earnings growth: Look for companies with a consistent track record of revenue and earnings growth, often exceeding market averages.
Market disruption: Identify businesses that introduce innovative products or services capable of reshaping industries.
Emerging markets: Target high-growth industries or regions with significant economic expansion, such as renewable energy or e-commerce in developing countries.
Momentum investing: Focus on stocks with upward price trends, assuming that strong past performance will continue in the short term.

","

Pros and Cons of Growth Investing

","

","

While growth investing offers some advantages for investors, it also comes with potential drawbacks. Here are five of each to consider:

","

Pros of Growth Investing

","$7a","

Cons of Growth Investing

","$7b","

How to Identify Growth Stocks

","

To identify growth stocks, investors should consider several factors and metrics. Here are six to keep in mind:

","$7c","

Frequently Asked Questions

","

Is Growth Investing Risky?

","

Yes, growth investing involves higher risk due to the volatility of high-growth stocks and the potential for companies to fail to meet expectations.

","

Which Sectors Are Best for Growth Investing?

","

Sectors like technology, healthcare, renewable energy and consumer discretionary often offer the best opportunities for growth investing due to their innovation and high demand.

","

Bottom Line

","

","

Growth investing offers opportunities for high rewards but also carries risks. This strategy focuses on companies with strong earnings growth, competitive advantages and promising industry trends, so that investors could position themselves to benefit from market expansion. Balancing growth stocks with value or income-generating assets can add stability and diversification to your portfolio.

","

Investment Planning tips

","$7d","

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The liquidation value of a company represents the total value of its assets if the company were to go out of business and liquidate its assets to pay off debts. For investors, understanding a company’s liquidation value can provide insights into its financial health and potential risk level. In certain cases, companies with a stock […]

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","

If you need help managing your investment portfolio, consider working with a financial advisor.

","

The Liquidation Value of a Company

","

The liquidation value of a company is an estimate of the total value that would be available if the company’s assets were sold off to pay creditors. This metric assumes a worst-case scenario where the company ceases operations and liquidates its physical and financial assets.

","

Unlike market value, which reflects the value of a company as an ongoing concern, liquidation value is typically lower due to the discounted prices assets may fetch in a quick sale. The primary components considered in calculating liquidation value are tangible assets, such as real estate, machinery and inventory, while intangible assets, like goodwill, are generally excluded or heavily discounted.

","

Liquidation value is often relevant for companies facing financial distress, as it provides creditors and investors with a realistic picture of asset recovery potential. Investors who focus on value-based strategies use liquidation value to identify “deep value” opportunities, as they seek out companies trading at prices below the worth of their tangible assets.

","

While not a comprehensive measure of company value, liquidation value offers valuable insights into asset-backed security, particularly for industries with substantial physical assets.

","

How to Calculate the Liquidation Value of a Company

","

","

Calculating liquidation value involves assessing the fair market value of a company’s tangible assets and subtracting any outstanding liabilities. Here are four general steps to help you calculate the liquidation value:

","$90","

Formula for Liquidation Value

","

Liquidation Value = (Total Tangible Assets – Inventory and Receivable Discounts) – Total Liabilities

","

If a company has $10 million in tangible assets and $2 million in liabilities, but the inventory and receivables have been discounted to $1 million, the liquidation value would be:

","

Liquidation Value = $10 million – $1 million – $2 million = $7 million

","

This $7 million represents the amount theoretically available to shareholders if the company liquidated its assets and paid off all debts.

","

Why the Liquidation Value of a Company Is Important

","

Liquidation value is an important metric for investors and creditors alike, as it helps evaluate the financial stability of a company.

","

For investors, particularly those in value investing, a company trading below its liquidation value may indicate a buying opportunity, especially if the market has undervalued its tangible assets. In situations of potential acquisition or restructuring, liquidation value provides an estimate of asset recovery potential.

","

Liquidation value is also relevant for creditors assessing risk when lending to or investing in a company, as it indicates the amount they might recover in the event of bankruptcy. If a company’s market value falls significantly below its liquidation value, it could be a red flag, indicating possible financial distress.

","

Investors can use liquidation value to identify undervalued stocks, seek higher levels of asset security or better understand the risk profile of companies they are considering for their portfolios.

","

Frequently Asked Questions

","

What Is Liquidation Value Used For?

","

Liquidation value is used to assess the worth of a company’s tangible assets if it were to close and liquidate its holdings. Investors use this metric to identify undervalued stocks or evaluate risk in distressed companies.

","

How Does Liquidation Value Differ from Book Value?

","

Book value is a method of investment analysis that reflects the value of a company’s assets on its balance sheet. Liquidation value, on the other hand, considers discounted asset prices in a quick sale. Liquidation value is often lower than book value due to the urgency of asset disposal.

","

Are Intangible Assets Included in Liquidation Value?

","

Typically, intangible assets are excluded or heavily discounted in liquidation value calculations, as they can be difficult to sell and may lose value quickly in a liquidation scenario.

","

Bottom Line

","

","

Liquidation value shows the tangible worth of a company’s assets in a worst-case scenario. Investors can spot opportunities in companies trading below this value, while creditors use it to evaluate lending risks. This metric helps assess financial security and asset stability, guiding investment decisions.

","

Investment Planning Tips

","$91","

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