Investing in bonds

Bonds involve investors loaning their money to an organisation (i.e. a government or a company), and receiving fixed interest payments over a set amount of time. They are traditionally seen as a safe investment, and a key part of a diversified portfolio.

Bonds have always been a popular investment for British investors, for while their value can fluctuate according to factors such as interest rates and inflation, they provide investors with a regular income.

At MoneyWeek, we'll keep you up to date with what's going on in the bond markets – and whether or not it's a good time to buy them.

MoneyWeek magazine

Latest issue:

Magazine cover
Heading higher?

Or are house prices set to fall?

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues

A beginner's guide to bonds

It's easy to become confused about bonds – the term covers a wide range of financial products. Here, Ed Bowsher explains the main types of bond.

How gilts work and why they matter

In this video, Ed takes a look at UK government bonds – how they work, why they are important, and whether you should invest in them.

How corporate bonds work

In his third video on bonds, Ed looks at how corporate bonds work, how risky they are, and whether or not they're a good investment for most people.


MoneyWeek bond watch

Government bond yields around the world started climbing again in Autumn 2010. This showed investors getting more jittery about a toxic mix of soaring state borrowings and rising inflation, and so demanding bigger returns as compensation.

Global ten-year sovereign bond yields

America's ten-year bond yield is arguably the world's most important market indicator: it sets the cost of global long-term borrowing. As with other government bond yields, it falls (prices rise) when economic growth and inflation decline, because the fixed income stream paid by sovereign debt becomes more valuable. Quantitative easing (central bank bond-buying) has lowered yields further.

But in mid-2012, yields bottomed, except in Japan where they've since followed suit. Economic growth is now reappearing, while inflation and state debt concerns are still present. A global bear market in bonds now looks a real possibility, led by US Treasuries. That would make borrowing more expensive everywhere.

Eurozone ten-year sovereign bond yields

On the edge of the eurozone, rising default fears have been sending peripheral countries' sovereign debt yields soaring. The rough line in the sand so far is 7% - when yields breach that, it looks like the point of no return.

How will this play out? Watch this page to keep a close eye on those yields - they're a great early warning indicator of trouble ahead.

Spanish and Italian three-year sovereign bond yields

Here's the chart of Spanish and Italian three-year bonds. As investors' fears about these countries' finances grew, yields spiked up sharply.


Bonds: the MoneyWeek view

November 2014: Too dear Government debt is too expensive to justify the risks. Corporate debt is also too expensive. In the QE-era junk bond yields fell to under 6%. A renewed downturn would imply a jump in defaults and a stampede out of the market.

See our view on all the major asset classes here.


Why Britain is repaying its war debt

The Treasury is making a song and dance about its decision to repay bonds issued to finance World War I. But is it really such good news? Simon Wilson reports.

The bond market’s in a bubble – and this proves it

Steer clear of super-low-paying corporate bonds, says Bengt Saelensminde. There are far better homes for your money elsewhere.

Sovereign defaults: Which will be the first domino to fall?

When countries go bust, others follow suit. Not even our Canute central banks will be able to hold back the coming wave, says Jonathan Compton.

Bill Gross: Recovery to remain 'puny'

Investors can expect more of the same, according to the ‘Bond King’ Bill Gross.

What investors can learn from Bill Gross’s bombshell and Tesco’s troubles

The shock resignation of Bill Gross – head of the biggest bond fund in the world – and the mess that Tesco is in show that management really does matter.

Two bonds to buy now

Investors should take a diversified, global approach to buying bonds, says fund manager Charles Zerah. Here, he tips two to add to your portfolio.

Are you prepared for liquidity risk?

It’s easy to see how a sell-off in bonds might get out of hand, says Cris Sholto Heaton. Investors should take note.

The hidden risks of junk bonds

The higher yields on ‘junk’ bonds may be tempting, but are they worth the extra risk? Cris Sholto Heaton investigates.

Air escapes from the junk-bond bubble

Yields on high-risk corporate bonds plummeted to a record as prices have soared.

Tread carefully in the debt market

Investors are bingeing emerging market debt. But this ‘irrational exuberance’ could result in a nasty hangover

Showing page 1 of 38

Sign up for Money Morning and get our FREE thought-provoking investment email every weekday morning to become a smarter investor. Sign up here

FREE investment email

From MoneyWeek

In under 3 minutes a day you too can become a savvy investor. MoneyMorning is our free daily investment email. With MoneyWeeks top writers contributing, a must have for any serious investor.