Types of bonds
Bonds are a great way to diversify your investment portfolio and reduce overall risk, providing a counterbalance to more volatile assets like equities.
Bonds are a reliable financial instrument that provide regular interest payments, making them ideal for investors seeking stability, income, and diversification. Issued by governments, corporations, and other institutions, bonds are rated by credit agencies to give transparency into their risk levels.
Bonds come in different ratings to match your risk tolerance. Higher-rated bonds offer lower interest with more security, while lower-rated bonds provide higher returns with added risk. Whether you're looking to stabilise a volatile portfolio or secure a steady income stream, bonds are a key component of a well-rounded investment strategy.
Bonds are a great way to diversify your investment portfolio and reduce overall risk, providing a counterbalance to more volatile assets like equities.
Government Bonds
Issued by national governments, these bonds are among the safest investments, especially from stable economies. While they offer lower interest rates, their strong credit ratings make them a dependable foundation for any portfolio.
Corporate Bonds
Issued by companies, corporate bonds generally offer higher yields compared to government bonds but come with higher risk. Rated by credit agencies, these bonds allow you to balance potential returns with risk, with higher-rated bonds providing lower returns and lower-rated bonds offering higher returns to compensate for the additional risk.
Diversification of your portfolio
Bonds are a great way to diversify your investment portfolio and reduce overall risk, providing a counterbalance to more volatile assets like equities.
Reliable cash flow
Bonds offer a consistent stream of income in the form of interest payments, making them a popular choice for investors who prioritise regular cash flow. This is especially appealing for those nearing retirement or planning for major life events, such as funding a child’s education.
Lower volatility
Compared to equities and other asset classes, bonds generally experience lower volatility, providing a more stable investment option. This makes bonds particularly useful during market downturns or periods of high uncertainty, when they often serve as a "safe haven."
Tax benefits
Certain bonds may come with tax advantages, such as tax-exempt municipal bonds. Depending on your location and the type of bond, you may qualify for tax breaks, helping to enhance the overall return on your investment.
Dependable income for retirement
Bonds can be a dependable source of interest income, making them an ideal investment for individuals approaching retirement. With their predictable returns, bonds can help secure a steady income during your later years, ensuring financial peace of mind as you approach important milestones.