InvestorQ : What are some of the major advantages of investing money in bonds?
diksha shah made post

What are some of the major advantages of investing money in bonds?

Answer
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Dilmini Mercia answered.
1 year ago


Money is substantially secured

Investing in debt is safer than investing in equity. The reason for this is the priority that debt holders have over shareholders. If a company goes bankrupt, debt holders are ahead of shareholders in the line to be paid. In a worst-case scenario, such as bankruptcy, the creditors (debt holders) usually get at least some of their money back, while shareholders often lose their entire investment.

Returns are largely predictable over the long term

By owning bonds, retirees are able to predict with a greater degree of certainty how much income they will have in their golden years. An investor who still has many years until retirement has plenty of time to make up for any losses from periods of decline in equities.

Returns are better than bank deposits

The interest rates on bonds are typically greater than the rates paid by banks on savings accounts. As a result, if you are saving and you do not need the money in the short term, bonds will give you a relatively better return without posing too much risk