Some Disadvantages of Bonds

Suba · Feb 1, 2024

When we invest in bonds, we not only study the advantages, but we also really need to study some of the disadvantages of bond investment so that we can minimize risks, such as:
1. Potential for failure to pay
Default can occur if the company goes bankrupt so it does not have the ability to pay interest and principal on loans or nominal bonds.
2. Interest rates change
For types of bonds with changing interest rates, there will be a tendency for the interest to become smaller in line with market interest rates.
3. Illiquid
The interest we earn from bonds cannot be withdrawn at any time.

SHAHID987 · Feb 1, 2024

Here we have different concept of bonds, as Government issues it. We just need to purchase it and after every three months government announced it's draw. If we win then we get the money, if not then our money remain save. Whenever we want we can easily cash it.

Suba · Feb 2, 2024

In my country there are two types of bonds issued by the government, fixed rate bonds and variable rate bonds. Even though these two types of bonds are safe, they will provide different coupon/interest profits.

nomad · Feb 4, 2024

Bonds give you guaranteed returns, however, compared to other markets and assets, bonds have lower returns. In my home country the average returns on bonds is just around 10 percent wheres as yo can earn 15 percent return on stock market.

Nite · Mar 16, 2024

Bond prices are inversely related to interest rates, so if interest rates rise, the value of existing bonds will decrease. Bonds also may not keep pace with inflation, leading to a decrease in purchasing power over time.

Stardom22 · Aug 5, 2024

I think that most of the bonds are very expensive to start. Mostly the low to middle income earners don't afford.

Rubz · Aug 24, 2024

Some disadvantages of bonds include;
- bond returns are volatile
- there is difficulty in selling bonds before maturity
- bonds interest is subject to taxation reducing net income
- unforeseen events like natural disasters can impact bond value.

Nite · Aug 28, 2024

Credit risk is a concern with corporate bonds, as there is a possibility that the issuer may default on their payments.

Stardom22 · Oct 22, 2024

For me l have never experienced the trading in bonds so l have little to no information at all about that

Nite · Oct 22, 2024

If inflation rises, the fixed interest payments from bonds may not keep pace with the increasing cost of living, leading to a decrease in real returns.

Passiveearner · Oct 31, 2024

Binds involve earning interest. In many cases, you basically "lend" money to the bank or any governmental institute that issues bonds. This creates a huge pressure in the government to pay the money back in the form of interest. This has a major negative impact on the economy of a country and this is a huge disadvantage of investing in bonds.

Stardom22 said:
For me l have never experienced the trading in bonds so l have little to no information at all about that

Nite · Oct 31, 2024

While bonds can be a relatively safe investment option, investors should be aware of the potential risks and drawbacks associated with them.

cherry123 · Oct 31, 2024

I think the one I would not like is that of the interest we earn fhat cannot be withdrawn at any time.

Some Disadvantages of Bonds

Suba

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SHAHID987

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Suba

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nomad

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Nite

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Stardom22

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Rubz

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Nite

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Stardom22

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Nite

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Passiveearner

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Nite

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cherry123

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