Bond investment at the current time?

TUVOK

I do realise that bond investment is currently deemed to be a no go area, but are there members with better bond investment knowledge than myself, who can offer any particular type which could provide a modest reward?

JohnWinder

In advance, you'll only know the reward a bond will give you if you hold it to maturity. That's because a bond is a contract to pay you back your principal at maturity, and some coupons along the way. If the issuer doesn't default you'll know what the reward will be as soon as you buy it.

But if you decide, ahead of time, to sell the bond before maturity, you won't know at that ahead of time time what its reward will be because its price might go on to be affected by interest rate changes or credit risk changes; the closer to maturity, the less impact these will have.

A bond fund doesn't hold its bonds to maturity, or even if it did they don't all mature at a fixed date (although such funds do exist I think). Thus, you'll never know what future reward it will give, modest or otherwise, unless it's a very short term fund and you intend to hold it for a short term. And then there's 'what's modest?'.

ColdIron

Bonds are hardly a no go area though those wishing to control volatility in an equity portfolio may prefer cash at this time. When you say 'reward' do you mean growth? That's not what bonds do. If you are looking for a reasonably regular income in the form of interest you could look at corporate bond funds or some of the investment grade bond funds. These of course come with some risk but it depends on what you are trying to achieve