Portfolio bonds

Bonds are often used by governments and corporations to raise capital for various projects and initiatives. For example, a government might issue a bond to finance the construction of a new road. Similarly, a corporation might issue a bond to finance the expansion of its business.

So when you invest in bonds, you are lending money to a government or corporation, which is generally considered to be a lower risk investment. They can benefit investors who are looking for stability in their portfolios and provide a steady stream of income, as well as the potential for capital appreciation if the bond is sold at a price above its face value.

Bonds also offer regular interest payments, which can provide a source of income for investors and help to diversify a portfolio. If appropriate this can make bonds an appropriate investment for income-seeking investors who want to receive predictable payments. Most bonds have a fixed interest rate, which means that the payments do not fluctuate with changes in market conditions.

Investing in bonds can provide protection against inflation because the interest payments on bonds typically increase with inflation. This means that a bond investment can be worth more in real terms as inflation increases. In some situations that can also provide investors with a way to minimise their tax liability.