Bonds

Bonds, also known as Fixed Income Securities, is a debt instrument that may or may not give you fixed interest payments (coupons). Most bonds pay interest on a annually basis and the full principle on maturity.

Some variants are:

• Zero-coupon bonds
  Those bonds that does not give fixed interest payments but are sold at deep discount of the maturity (par / face) value. In other words, you don't get the fixed interest payment but do get them at maturity as these interest are paid in terms of the discount, and you only get them at the end of the maturity.
• High Yield / Junk Bonds
  These are in fact from the name itself, junk bonds. They do not provide any security in default payment and the company selling such bonds gives high interest as their credit rating is lower than BBB in general.

Please be aware that Bonds have certain risks and are never "risk-free" as anyone would claim. If anyone ever tries to convince you that that it's "risk-free", make it a point to get their name card and make them write that term down into the contract itself. If they refused to, especially in writing that term down, it's probably a scam. Try asking them, which line in the contract says that it's "risk-free"? Just remind yourself of the lehman brothers' case and be wary of such things.

Some Risks of Bonds includes:

• Interest Rate Risk (when interest rate increase, bond's market price will drop and the inverse if true)
• Reinvestment Risk (you can't be sure if you can reinvest the interest payment in a interest rate of something similar)
• Timing / Call Risk (if you bond has a call option that the issuer can redeem your bond before maturity, you'll lose all future income when the market interest rate drops)
• Default Risk (the issuer may go bankrupt like Lehmen Brothers, or may be unable to pay off your interest / the maturity value on a temporary or permanent basis.)
• Liquidity Risk (If the market lacks people that are willing to buy over your bond readily, you may face such problem if you needs the money and is unable to sell your bond.)
• etc...
  

Treasury Bills

All the below is based on Singapore Govt Treasury Bills, part of Singapore Government Securities.

This is the safest type of instrument especially if the Treasury Bill is issued by our Government. In general, this is something which is considered to be risk-free as it means borrowing our government money. Minimum investment size is $1K depending on where it's being sold.

Such investment instrument is issued on a discount on its maturity value by our government. The investment period is 3 mths and 12 mths. Liquidity is available unlike fixed deposit, they can be sold before maturity. It's just a matter on how much interest you'll get from such sale. But due to the low risk involved, there interest rate is not very high.

The interest aren't very high according to the statistics I've seem today. You may want to put them in those higher interest rate banks instead.

Term Insurance

The cost of such insurance depends on your age but it's by far the cheapest form of insurance available. Normally it covers death and total permanent disability only. Some covers critical illness as well but you will need to confirm this with your agent. There are some policies that you can buy the critical illness as a rider of the term plan. Read more on critical illness.

If you wanted to be covered permanently but is currently can't afford to do so, try finding a term insurance with convertible option that allows you to convert it into permanent insurance without the need to prove that you are still healthy. As in as long as you gets insured and remains insured for the term insurance, you can convert it into a normal life insurance that has cash values built up on the dates available for conversion.