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Hariz Arthur Maloy
07 Jun 2019
Independent Financial Advisor at Promiseland Independent
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Clarence Chua
11 May 2019
Financial Planning Specialist at Prudential Assurance Singapore
Government bonds are usually safer than corporate high yield bonds as Hariz has mentioned.
But even when it comes to Government issued bonds, it is important to look at the strength and rating of the said government.
And also the political environment and stability of the country. After all, it is also possible for a government to default.
Though bonds are considered a less risky investment as compared to other classes of asset.
It is ultimately important for you to invest in other classes and have a diversified portfolio.
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Investment grade Govt bonds are pretty safe. Corporate high yield/junk bonds, less safe.
All bonds have a capital guarantee upon maturity. The risk here is the default risk of the issuer.
The stronger the issuer is financially, the higher likelihood they'll be able to return the money as promised. Thus, look at the credit rating of the issuer and also the prices the bonds trade at as compared to their comparable bonds.