How to Secure a Surety Bond

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Securing a surety bond requires buying and insuring a contract against another investment in order to minimize the downside potential. Protect investments from large losses by investing in a surety bond with instructions from an investment portfolio manager in this free video on investing and personal finance.

Part of the Video Series: Investing & Personal Finance Tips
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Video Transcript

So, how to secure a surety bond. The first thing, surety bond is really a bond or a contract to make sure that another contract is going to happen. Most of the times it'll be within construction or development projects where you'll have contractors who says they're going to do the job for an owner and the owner will take out a surety bond covering liabilities and make sure that that job does get taken care of. In the securities marketplace there are a type of surety bond and basically they're most basic in terms of them being insurance contracts. And what that is, is to buy and insurance contract against another investment to basically minimize the downside potential. Usually it takes a little bit of the profit away from the upside but it protects from a total loss many times. So an insurance contract in that sense may be a fairly risky bond and that would be a securities bond or corporate bond for example. To minimize the downside potential of losing all the money they will have a surety bond put in place to protect that. That may take some of the profit away in the end on the upside, but it does protect for again, total loss of that investment.

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