Investing in bonds is a good choice for a number of reasons. First, they are a good passive income source, paying regular interest. Second, they are less risky than bank deposits. Third, they can be traded on the secondary market. In addition, they don’t depend on a company’s profitability, which makes them a good option for people looking to diversify their portfolio.
Bonds are issued by governments, and they often have fixed maturities. Because the government is the issuer, the risk of default is low. Sovereign bonds, for example, have an extremely low risk of default because the government can afford to pay the interest. In addition, they are often issued in local or hard currency.
Another factor to consider when choosing a bond is the maturity, or how long it will take to pay back the principal. Bonds with a long maturity have higher yields, but are more risky. Those with long-term maturities will be affected by changes in interest rates more than those with shorter-term maturities.
Bonds are a good choice for families looking to diversify their portfolios. They have a higher yield than most other investments. They also have a lower volatility than stocks.