Factors to Consider When Investing in Bonds

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An investment on bonds is a great way to secure your money. This safe asset provides a steady income and price appreciation. Interest rates are low, making bonds a better choice for long-term investments. However, they can also be risky. Listed below are some factors that should be considered when investing.

A bond is a fixed income investment that is issued by a company, government, or organization. The investor is lending the issuer money in exchange for periodic payments of interest at pre-set intervals and the repayment of the original principal at the end of the bond’s term. The interest rate is influenced by the bond’s quality and maturity. Bonds are also traded on secondary markets, allowing for greater diversification.

The volatility of investment on bonds is very low compared to investments in stocks or real estate. The standard deviation is less than a third of the mean. The average amount of money invested in bonds is 9.0717 billion naira. The minimum and maximum values are 8.1231 and 9.8009 billion naira.

Australian Government Bonds (AGBs) are government debt issued by the Australian government. The government guarantees the rate of return until maturity. Other types of bonds, like Exchange-traded Treasury Bonds (ETTs), are issued by corporate entities. Most of these bonds are traded on the stock market. Most bonds require a large minimum amount of money to be purchased. If you do not pay the minimum amount, you won’t receive the face value of the bond.

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