So would you prefer to use selecte, supposedly "bomb proof" government bonds?
This too is not without risk. Holds, for example, German government bonds and deposit interest rates rise in the euro zone by surprise, even threatening losses.
The reason is that potential buyers buy new bonds with higher interest rates can. If you want to get rid of its old bonds, but you have to give them so cheap that the buyer can achieve a high return as well with new bonds. Those who simply waits until the end of the term needs, but to not have to worry about, get in the end but only the interest initially promised.
Fact is, the rush for corporate bonds is no accident. He is also a consequence of low interest rate policies of central banks. Investors want more than that offer what savings account overnight or even borrowing from federal returns.
However, the bond market is very confusing and opaque. Despite individual trading rules, there is still no real standards. The consequences of such a hype for bonds, can be studied in the United States. End of the 80s, there came a veritable boom in junk bonds, many investors after the crash cost her money.
This too is not without risk. Holds, for example, German government bonds and deposit interest rates rise in the euro zone by surprise, even threatening losses.
The reason is that potential buyers buy new bonds with higher interest rates can. If you want to get rid of its old bonds, but you have to give them so cheap that the buyer can achieve a high return as well with new bonds. Those who simply waits until the end of the term needs, but to not have to worry about, get in the end but only the interest initially promised.
Fact is, the rush for corporate bonds is no accident. He is also a consequence of low interest rate policies of central banks. Investors want more than that offer what savings account overnight or even borrowing from federal returns.
However, the bond market is very confusing and opaque. Despite individual trading rules, there is still no real standards. The consequences of such a hype for bonds, can be studied in the United States. End of the 80s, there came a veritable boom in junk bonds, many investors after the crash cost her money.
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