Safety of bonds in current market

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optimist25

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I have a bond which has recently matured (10 year -capital guaranteed) and am wondering whether to reinvest in similar product or put money on deposit with a state guaranteed bank or the post office.I am more concerned with safety than return at the moment.How safe are bonds?I'm thinking they are only as secure as the company that issues them with no government backing if company goes bust.Value is around E50,000.Would be grateful for advice.
 
How safe arer bonds is a pretty general question? It depends not only on who is issuing it but the seniority of the debt and the terms.

I think you will find that everyone is concerned with safety and return. Does risk/return ring a bell?

Basically with bonds, the higher the coupon the higher the risk.

Bonds are only as secure as the company backing them. Essentially you are lending money to the company in return for a coupon (interest). If the company goes bust, normally all it's assets ae sold in order to pay off the debt holders (including bond holderrs). If after this anything is left over, finally shareholders are paid. For this reason buying bonds is less risky than buying shares in a company.

As for bonds vs savings account. A savings account is generally quite liquid but is based on a rate over a quite short term (normally <2 years). After the original deposit term rate ends, the rate will cange. Bonds are generally much less liquid and are over a longer term. You are normally compensated with a higher interest rate for locking in your money for longer.
 
I suspect optimist25 may be referring to a bond as a lump sum investment product marketed by a retail financial institution as distinct from a corporate or Government bond.

Could optimist25 please clarify, as the replies will be vastly different depending on what type of bond you're referring to?
 
Thanks for reply.I think I may put half the lump on deposit and continue with another 5 or 10 year bond with the rest in the hope that things stabilise eventually-they will won't they???!
 
It was indeed a lump sum invested in Hibernian celebration with-profit bond.I thought about treasury bond as a safe option but with the current state of treasury would be a bit reluctant.Also thought about deposit in non-Irish bank eg Northern Rock/ Abn Amro as suggested in a few earlier posts.Thanks .
 
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