Stocks and bonds are good ways of investing your hard- earned money, especially if you’re not so sure about other financial options, but even in these common categories, there are dozens of sub- types that might turn you off from the whole idea of investing. Fortunately, these different types of options can be categorized into understandable terms in order for novices to become better acquainted with their investment plan.

When you’re considering investing in bonds, you might hear of Treasury bonds and junk bonds fairly often. Treasury bonds are investments that are backed by the Canadian government and thus are less risky. The downside is that they offer very low yields. Junk bonds on the other hand have higher potential yields but are considered more risky because of their diversified background. This is an oversimplified explanation of these two investment options ; in order to familiarize yourself with the industry lingo, you’ll also have to look into the spread.

The spread is the risk involved in any investment plan. If the spread is too wide, then the option is riskier but might pay out a higher yield and vice- versa. When looking at the spread, check out the yields currently being offered by Treasury bonds and compare that to the London Interbank Offer Rate (or LIBOR) although LIBOR’s credibility is under fire lately. These two figures can tell you how stable the market currently is. If there is a huge disparity, then it might not be worth investing at the moment.

If you’re still interested, then keep track of all of these rates until you find a good time when the risks are relatively low, but the yields are comparatively high.