what to consider before investing in bonds?

WHAT ARE THE PROS & CONS OF INVESTING IN BONDS

PROS

• The Investment returns are fixed, You will receive a fixed rate of interest and your principal

• Investment will be returned when the bond matures. This means that you know exactly how much your returns will be when you invest.

• You receive an additional return via interest payments from the borrower

• You can sell the bond at higher price than your purchase price to another investor

• Less risky compared to stocks. Bonds are safer and are more steady investments than stocks since you are receiving an agreed return.

Besides receiving specified investment returns, bondholders are paid first over shareholders in the event of liquidation.

CONS

• Bonds tend to pay out lower return than stocks

• Corporations can default on loans

• Yields can fall based on interest rates