bonds

A bond is an agreement between two people or an organization, wherein one is prepared to give an initial sum and the other to pay back the sum when they do so and when the sum repaid is more than the initial sum, the creditors are required to make a return of the same percentage. There is also a debenture holder in this arrangement who will lend money and receive it back with a small interest rate. Moreover, bonds like UP Power Corporation bonds are bought for a term and are convertible from one form to another at the time of the maturity date. Thus, below are some of the reasons why you should invest in bonds.

  • A steady stream of income-Bonds provide a regular income stream to the investor by paying interest to the investor every month. This makes it one of the best ways to preserve one’s capital as it gives the investor a steady stream of income over a longer period. Moreover, one can choose between two returns; either a consistent and continuous income stream from bonds over a long period or a risk-free return over a shorter period.
  • Protection against volatility-Investors must be careful that they don’t go in for short-term borrowing options for covering up their long-term financial requirements. It may be good to opt for bonds as it offers many other advantages than just locking the money. Bonds can help in enhancing the liquidity position of the investors and are also considered as an excellent asset class to invest in for the long term. As such, one needs to be aware of how much risk the investor is comfortable with. 
  • A better return than cash-Bonds provide a higher return than cash. Cash offers a return of around 1.5% to 1.7%. Bonds will generally deliver a yield in the range of 5% to 7.5%. Hence, the investor will be paid 6 to 7% for the investment. Most bonds pay interest quarterly. Thus, the investor is paid a fixed interest on every rupee invested. Thus, the yield is variable. High-yielding bonds are not usually suitable for long-term investors as they will not continue to offer a fixed rate over the long term.
  • Bonds can be used to hedge other investments-Highly volatile assets such as shares can be beneficial for investors when it comes to risk management. Since bonds pay monthly, there is a probability that the principal amount would stay constant for some time. This ensures that any stock market correction or any correction in the price of an equity holding does not make an investor’s portfolio lose value.

Bonds are considered as a pure and secure investment option that does not involve any risk.Given the current market situation, the best investment option is to stay invested and liquidate one’s losing investment and opt for risk reduction.Bonds like UP Power Corporation Ltd bonds are considered as safe investment tools by the financial experts and there are no related or volatile returns, therefore, they can be considered as an ideal tool for the risk-averse investor to invest in.

By JenniferKIM

Jenniferkim is a General Blogger & writer who has been extensively writing in the technology field for a few years. He has written several articles which have provided exciting and knowledgeable information on Finance, Business, Tech, Travel, Sports in Italy.

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