Bonds
Bond is an instrument of indebtedness of the bond issuer to the holders. Government, corporations and companies issue bonds to raise fund. Buying bonds is same as lending fund to the issuers, issuers are obliged to pay them interest (the coupon) and/or to repay the principal at a later date, termed the maturity. Bond holders can choose to hold to bonds until it matures or sell it before maturity at the market price.

 

Reason for investing bonds

  • Enjoy a higher return than bank fixed deposits
  • Receive coupon interest regularly
  • Variety of choice, select the bonds suit you the most
  • Credit ratings of government bonds are
    higher  than the banks
  • Maturity can be as short as 3 months
  • Withdraw before maturity without charging extra
    interests
  • Can serve as the margin collateral for equities
  • Transaction fee as low as 0.15% of the face value of the bond
  • Generally speaking, the volatility of corporate bonds is lower than equities