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.

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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

December 2014: Trouble ahead Yields for most types of bonds are near all-time lows. So we'd argue that debt is too expensive to justify the risks. Junk bonds in particular look vulnerable – the oil-price plunge has rattled bonds from energy explorers, and this could spread into other areas of the market if investors panic.

See our view on all the major asset classes here.


Why I’m not excited about Osborne’s 'pensioner bonds'

Ignore the hype surrounding George Osborne’s ‘pensioner bonds’, says David Thornton. Investing in penny shares makes much better sense.

What will trigger the next big bust?

Credit markets are currently priced for perfection. But when the cycle turns, the fallout is likely to be severe.

The sliding oil price could be the next subprime crisis

The price of oil is collapsing. And if it continues to fall, it could trigger a wave of defaults in the US. John Stepek explains why.

You can’t predict the future. So how do you invest for it?

As the Ukraine crisis shows, investors can never be sure what’s around the corner. John Stepek explains one investment strategy that can give you peace of mind.

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.

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