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Bonds are never going to be the most exciting part of the investment world, but they have a place in most investment portfolios. They offer more stable returns than those available from the stock market, so they're a good option for risk averse investors or those whose portfolios are already risky enough. The drawback is that profits can be greater elsewhere, but a good selection of bonds should still outperform cash over the long term.
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Our guide kicks off with gilts, which are bonds issued by the UK government. Given that the country’s finances are far more secure than those of any individual company, government bonds are amongst the most safe available, albeit with a return that reflects that lack of risk. We take a look at what gilts are, and how to invest in them via funds.
The next section addresses corporate bonds, which is a far more varied investment proposition. At the top of the scale are the safe multinationals, which offer little risk but small returns. At the bottom are the so-called junk bonds, which are issued by very risky companies but offer tempting returns to match. We look at the worlds of corporate bonds as a whole, and then examine the merits of direct investment and investment via funds.
Then we take a look at bond prices, and how they move. Bond prices do not move in the same way as share prices, so it's important to have a good idea of what's driving them.
Finally, there is a link to our regular Bond of the Week feature.
Click on the links below for detailed guides on bonds:
Direct investment in corporate bonds
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Warning: Do remember, particularly if you are new to stock market investment that the prices of shares and other investments can fall sharply. You may not get back the money you originally invested. The material here is for general information only and is not intended to be relied upon for individual investment decisions. Take independent advice before making such decisions. This site is aimed at UK residents only. To read more please see our Important Warning
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