Investing in bonds

Bonds involve investors loaning their money to an organisation (ie 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.

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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

May 2015: Insanely expensive Government paper become insanely expensive. Corporate debt isn't cheap either – yields are in the mid-single digits. While a pin that could burst the bubble, eg a jump in inflation, is not currently in sight, we would steer clear.

See our view on all the major asset classes here.


Is the bond bull market over?

Government bonds may be overpriced, but there’s life in the bubble yet.

Which pin will burst the bond bubble?

Spotting financial bubbles isn’t difficult. What’s hard is predicting what will burst them. Here, John Stepek looks at what might bring the bond bubble to an end.

A nasty surprise lurks in government bonds

Cris Sholto Heaton explains what will happen in the bond markets once central banks begin to raise interest rates.

Bonds take a tumble

The European Central Bank’s money-printing caused investors worried about deflation to rush into government bonds, pushing prices up and yields down.

Stocks swoon as bonds slump

Jitters have begun to affect stocks following the recent bond-market slump.

Let’s get back to capitalism

It’s time for the government to let capitalism work as it should, and make us all better off, says Merryn Somerset Webb.

The looming bond crunch

Since the financial crisis, banks have offloaded their bonds to funds. If bonds slip up, and the funds can’t sell, this will be dangerous for ordinary investors. Simon Wilson reports.

If the bond bubble bursts, you’ll need to be prepared

The recent spike in bond yields could be the start of something big. John Stepek explains how the bond market works, and how to protect yourself when the bubble bursts.

Three bubbles that are ready to pop

Cheap money, artificial credit, and zero interest policies have created all sorts of bubbles since the financial crisis of 2008. Dominic Frisby looks at three that are ready to pop.

Two colourful but risky corporate bonds

Brewer Innis & Gunn and rugby club Wasps are looking to raise money directly from investors. Should you take up their offers? Cris Sholto Heaton investigates.

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