Keeping your strip bonds safe
There are two basic ways for an investor to holder strip bonds and strip bond packages - hold them through a financial institution or hold them yourself. In most countries today, all strip bond packages and almost all strip bonds are held through a financial institution.
- Leaving them with a financial institution
- Precautions for holding receipt security strip bonds
- Precautions for holding physical strip bonds
Leave them with a financial institution
The best way to keep your strip bonds safe is to leave them with an investment dealer, trust company, or bank. In Canada and most countries, this is the only way that you can purchase strip bonds and strip bond packages today.
Most physical strip bonds and receipt security strip bonds also may be left with a financial institution for safekeeping.
If you currently hold a receipt security strip bond or physical strip bond yourself (i.e., not through a financial institution), you should consider asking a financial institution to hold the strip bond for you. The risks and costs involved with holding securities in certificate form are well-known within the financial community. In some countries, certificates are no longer available at all.
In Canada and the U.S., financial institutions may have policies against accepting physical strip bonds and receipt security strip bonds, particularly those that the institution did not originate. You should also ask if the institution charges any fees for the service.
NOTE: In Canada and the U.S., once physical strip bonds are lodged with a financial institution, you should expect that 1) the institution will deposit them with a securities depository and 2) you will not be able to withdraw the securities later, although you should be able to transfer them to another financial institution on payment of the applicable fees.
Precautions for holding receipt security strip bond certificates
If you have a receipt security strip bond certificate in your possession, you should take precautions to adequately protect it from loss or destruction. At a minimum, use of a safety deposit box and insurance is recommended.
Precautions for holding physical strip bonds
If you have a physical strip bond in your possession and prefer to continue holding it yourself, you should take extra precautions to adequately protect it from loss or destruction. At a minimum, use of a safety deposit box and insurance against loss is strongly recommended.
NOTE: Physical strip bonds are payable to the bearer. If they are lost, stolen, or destroyed, you will not be able to replace them.
NextCopyright Keith Campbell ©2002-2004. All rights reserved.