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Investing in Bonds

Investing in Bonds

Bonds are a good option if you want regular, stable income. Bonds are considered defensive investments because they pay interest regardless of the company’s profits.

Your Benefits

  • Fixed term
  • Interest payments not tied to corporate profits
  • Can generally be sold before maturity

How Bonds Work

Standard bonds are fixed-income securities issued whenever companies, governments or banks want to borrow money in the capital market. The bonds state the amount to be repaid, when it is due, how much interest investors will receive, and when. This type of security generally has a fixed term during which you receive fixed or variable interest payments. Investment bonds do not carry any equity rights.

Different interest rates

A bond’s interest rate, called a “coupon rate,” depends on market conditions and the issuer’s credit rating. When markets are liquid with low benchmark rates, solvent governments and companies pay low coupons. Higher yields can be obtained with international investments such as CHF hedged fixed-income instruments.

Anchor: comparison
Bonds are a more defensive asset that can help diversify your portfolio.

Bonds are a more defensive asset that can help diversify your portfolio.

Differences between Bonds

Learn the features unique to each class of investment bond and put their benefits to work for you.

  • Standard bonds

  • Money market investments

Anchor: risks

Increase Risk. Maximize Yield

Investment bonds provide regular income. You can earn fixed or variable interest during the bond term. The interest rate depends on factors such as capital market conditions and the issuer’s credit rating.

  • Potential loss

  • Interest rate risk

  • Issuer and credit risk

  • Guarantor risk

  • Liquidity risk

  • Foreign exchange risk

  • Concentration risk

  • Money market credit risk