What are Bond Funds?
- San Jose & Partners
- Jul 23, 2020
- 2 min read
Updated: Aug 8, 2020
Let Us make it SIMPLE.
A monthly blog where we explain financial products, SIMPLE.
By: King San Jose- Santos, R.F.P, M.I.F.C
Bonds are a type of investment where a company or a government borrows money from investors. In return, you are paid interest on the amount they loan. In short it is an I.O.U + interest.
Corporations and Government issue bonds to help fuel specific projects or on going expenses.
The reward in investing in bonds
Bonds are technically a hybrid sharing of risk and reward.
Bond has a low correlation in regards to other asset classes .
This is good when your objective is to preserve your capital while not suffering growth potential.
In summary,
Consistent annual earnings
Less volatility compare to stocks
The risk in investing in bonds.
All investment has their own risk. As a certified registered financial planner, we strongly recommend our clients to diversify their portfolio and investment. Mixing up investment in different asset classes are still the best way in generating consistent returns while minimizing your risk.
Interest Rate Risk
Reinvestment Risk
a bond poses a reinvestment risk to investors if the proceeds from the bond or future cash flows will need to be reinvested in a security with a lower yield than the bond originally provided
3. Understand the supply and demand
4. Risk for default
Understanding the bond fund. Safer alternative
Another alternative is to invest in a bond fund. This will help you lessen the stress of doing tons of research, analysis and other miscellaneous task , not include the stress of monitoring and choosing the right bond.
Benefits in investing in Bond fund
A bond fund is one of the easiest and more safer way to invest should you wish to invest in bonds. Limited funds will only allow you to acquire 1 or 2 bonds, however when you invest in a bond fund, it allows you to invest in several types of bonds.
Dollar Variable Return Asset: By Insular Life
The product is a zero initial charge, one time US-Dollar denominated premium investment linked insurance plan that allows you to participate in diverse portfolio of bonds.
Our Verdict? SJ&P Financial Planner Approves.
And there's more!
This bond is bundled with an insurance plan which can be used to protect your family as well.
Still confused where to invest? Talk to our certified Registered Financial planner for FREE and discover other alternatives for your financial goals.
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