What Are the Risks of Investing in Government Bonds?

[Dowenship]

Government bonds or so-called government bonds are bonds issued by the government of a country, there are also types of international bonds (sovereign bonds) denominated in foreign currencies (USD). There are many advantages if we have a government bond between: safe from credit risk or default, fixed income from periodic interest coupons set by the issuer. Generally, bond interest is higher than deposit interest or the central bank rate. The capital gain if sold on the secondary market will be greater than 100%. Government bonds as an investment instrument offer many advantages, but on the contrary, of course, there are also many risks that we should know about. So what are the risks of investing in government bonds that you know?

I don't know much on stocks... Am even working towards learning more about stock trading which prompt my curiosity on a question from this write up... What are bonds in stock..?

 

[Suba]

I don't know much on stocks... Am even working towards learning more about stock trading which prompt my curiosity on a question from this write up... What are bonds in stock..?

Bonds and stock are two different investment instruments. Bonds are debt acknowledgments, and will earn interest regularly, and this debt will be paid at maturity, while stock is equity participation in the company, Shareholders will get dividends and capital gains.

 

[Dowenship]

Hmm... Beautiful... Well understood and clear.. Thinking bond is a mode of trading but with this explanation i now know the different. Thanks for the info..

Bonds and stock are two different investment instruments. Bonds are debt acknowledgments, and will earn interest regularly, and this debt will be paid at maturity, while stock is equity participation in the company, Shareholders will get dividends and capital gains.

 

[Georgeadawara]

Tax consideration,treasury bond interest is fully taxable at the federal level but it is exempt from state and local taxes

 

[kayode10]

Inflation may catch up with the return on investment all the Bond you buy from the government. Another thing is that if there is a change of government is might be difficult to recover your money.

 

[Hojo]

I won't advice anybody in my country to try and financial shii wit the government , my aunt was given an appointment to construct a road with her money that she will be paid but up till today she hasn't gotten anything as return

 

[Hojo]

I won't advice anybody in my country to try and financial shii wit the government , my aunt was given an appointment to construct a road with her money that she will be paid but up till today she hasn't gotten anything as return

 

[justija]

Government bond is cool not until a particular tenure is over and the next government doesn't recognize you , and makes you go astray

 

[Kaffyfolla]

Although bonds are considered safe, there are pitfalls like interest rate risk—one of the primary risks associated with the bond market. · Reinvestment risk ...

 

[tyrim88]

Government bonds or so-called government bonds are bonds issued by the government of a country, there are also types of international bonds (sovereign bonds) denominated in foreign currencies (USD). There are many advantages if we have a government bond between: safe from credit risk or default, fixed income from periodic interest coupons set by the issuer. Generally, bond interest is higher than deposit interest or the central bank rate. The capital gain if sold on the secondary market will be greater than 100%. Government bonds as an investment instrument offer many advantages, but on the contrary, of course, there are also many risks that we should know about. So what are the risks of investing in government bonds that you know?

What i know about the investment in government bond is that,it is usually paid upfront,and the capital is very safe and would be returned after the tenor elapses.i have not really seen any issue that might arise from investment in government bond.

 

[Suba]

What i know about the investment in government bond is that,it is usually paid upfront,and the capital is very safe and would be returned after the tenor elapses.i have not really seen any issue that might arise from investment in government bond.

I agree with you, the risk of default is very small on government bonds, interest will be paid regularly, as an investor you are certainly familiar with liquidity risk and market risk, which will certainly cause losses for government bond owners.

 

[Setho]

There might be some disadvantages but I do not think there are any reasonable risk that is attached to buying government bonds as far as you're buying it from a bank.

 

[tyrim88]

I agree with you, the risk of default is very small on government bonds, interest will be paid regularly, as an investor you are certainly familiar with liquidity risk and market risk, which will certainly cause losses for government bond owners.

well what i have so far experience for sometimes in the government ond is that while your capital is being used by the government agency for what purpose they wants to use it,you are making use of the full benefits at once.

 

[Suba]

well what i have so far experience for sometimes in the government ond is that while your capital is being used by the government agency for what purpose they wants to use it,you are making use of the full benefits at once.

What I discuss is the issue of the risk of investing in government bonds, not discussing profits, so the risks inherent in government bonds are liquidity risk and market risk.

 

[nimzy]

The risk can not be over concluded because it might be risky and it might be less risky so the situation is that only when it's has happened you can be able to determine and identify such.

 

[Ceeny007]

The main risk associated with government issued bonds I think is interest rate fluctuations, change in interest rate could affect it

 

[Trexxxy]

I don't see much risk, just like a lot of people have said. I think the maturation might not be much, seeing as it hinges on different factors, like inflation and other economic factors.

 

[Justin]

The major risk of investing in government bonds is the loss of your investment if the project where the government has invested fails, another risk is because of corruption from the politicians.

 

[Ub40]

Personally, I have not invested in government bonds before so I don't know how it works or even the advantages and disadvantages. But I am willing to learn as no knowledge is a waste couple with how risky it is to put all eggs in one basket. That is just my opinion.

 

[CeeJase]

If it's for me to investing in UK or America government bonds, I am definitely going to be open to doing that but as long as it's Nigeria my country I'm not going to do it at all.