Source: Erik Schriemer, investment expert at MeDirect
Bonds are a type of investment where you lend money to a government or company in exchange for regular interest payments and the return on the nominal value of the bond at maturity. The maturity date is the fixed date on which the bond must be paid in full to the bondholder. Bonds are also assessed on their level of risk, with higher ratings indicating lower risk and lower interest rates.
We keep saying it: if you invest, it is wise to diversify your portfolio, in other words to spread it. Diversifying a portfolio by including bonds can help lower the overall risk of an investment portfolio and provide a steady stream of income.
For example, if a portfolio is primarily stocked and the stock market is experiencing a downturn, having bonds in the portfolio can offset some of the stock’s losses with their steady interest payments.
There is a “golden rule” on the number of bonds in a portfolio. As a rule of thumb, it is recommended to keep the percentage of bonds in your portfolio equal to your age, such as 30% bonds in a portfolio for a 30-year-old investor. However, the exact mix of bonds and stocks in a portfolio depends on personal financial goals, risk tolerance and investment horizon.
In short, bonds are an important tool for diversifying an investment portfolio and ensure a steady flow of income. The number of bonds in a portfolio should be determined based on the individual’s investment goals and risk tolerance.
Investing in bonds with MeDirect is very easy due to several factors:
- Wide universe of shares: MeDirect offers a wide choice of bonds.
- User-friendly platform: Our user-friendly platform makes investing simple and fun. You get access to important information and useful tools. With our filtering options we make it very easy to find the right bonds that suits your investment goal.
- Low costs: Buying and selling bonds is very advantageous at MeDirect. Check the costs here.
- Free investment training: At MeDirect we want to make investing easier. That is why all our customers receive an online training program at Markets are Everywhere. Terms and conditions apply, click here for more information.
- Expert support: If you have a question, don’t hesitate to ask!
Disclaimer
The information contained in this document is for general information purposes only and is not intended to provide legal or other professional advice nor does it commit MeDirect Bank (Malta) plc to any obligation whatsoever. The information available in this document is not intended to be a suggestion, recommendation or solicitation to buy, hold or sell, any securities and is not guaranteed as to accuracy or completeness.
If you invest in any product, you may lose some or all the money you invest. The value of your investment may go down as well as up. Any income you get from any investment may go down as well as up. A commission or sales fee may be charged at the time of the initial purchase for an investment.
Any decision to invest should always be based upon the details contained in the Prospectus and Key Information Document (KID).
MeDirect Bank is a trading name of MeDirect Bank (Malta) plc, registered under company number C34125, MeDirect is licensed to conduct banking activities in accordance with the Maltese Banking Act (Cap. 371) and investment services under the Maltese Investment Services Act (Cap. 370).