Bonds provide diversification and reduce risk

When buying bonds we are acquiring a piece of a government’s or a company’s public debt.

Generally, we assume that government bonds are fully guaranteed and that they have unlimited credit worthiness so bondholders don’t have to face the risk of failure (nowadays, this is limited to a few sovereign countries like the USA and Germany).

Some countries offer inflation-indexed bonds that can add to a portfolio additional diversification according to the investor’s profile.

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Investing in corporate bonds can be slightly more complex and in this case, the investor has to assume additional failure risks depending on the issuing company’s risk rating, especially for the high yield segment.

In general, bonds confuse investors by the inverse relationship that occurs between interest and the price for each bond (if the interest rate rises, the price goes down, and vice versa). This means that although there is always the guarantee we will recover a major part at maturity (of course, if there are no failures); portfolios built up mainly with bonds can become quite variable in volatile times.

Where to invest, Inbestme’s Scope:

Government bonds (selected) provide a unique opportunity to diversify one’s portfolio, and serve as a hedge against accidents or even deflation.

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Inbestme never invests directly in bonds, municipal or bond from specific companies. However, our portfolios according to the risk profile might include fixed income sections through efficient low cost ETFs that combine municipal bonds and high rating companies in order to ensure the portfolio’s hedging and diversification.

Our diversified portfolios are an excellent way to start if you’re willing to make your first steps in the world of investments.

Know your investment profile and begin investing with us as soon as possible. Time and discipline are the best allies for any investor. Inbestme combines optimal portfolios with ETF’s from different asset classes and markets. You can now become a successful investor starting with 10,000 €.

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