Investing in corporate bonds is a common financial management method, which can provide investors with fixed interest income and repay the principal at maturity. So is it risky to invest in corporate bonds? Is it worth buying? Today, Bian Xiao has prepared the relevant contents of investment company bonds for your reference!
Is it risky to invest in corporate bonds?
Investing in corporate bonds is also risky, and the risk of corporate bonds mainly comes from the default risk of the issuing company. If the issuing company fails to pay interest or repay the principal on time, investors will face losses. Investors can refer to the company's credit rating before buying corporate bonds. Professional credit rating agencies will rate corporate bonds according to the company's financial situation, solvency, industry prospects and other factors. Bonds with high credit rating have lower default risk.
In addition, there are market risks and interest rate risks in investment company bonds. Market risk means that bond prices may be affected by changes in market supply and demand, leading to bond price fluctuations. Interest rate risk means that the rise of market interest rate may lead to the decline of the value of existing bonds. When the interest rate of bonds held by investors is lower than the market interest rate, the opportunity cost of continuing to hold bonds increases.
Is it worth buying?
There is no absolute answer as to whether corporate bonds are worth buying. Investors should evaluate whether it is worth buying according to their risk tolerance and investment objectives. If investors have a high risk tolerance and are willing to take certain risks, they can get relatively high returns by buying corporate bonds. Compared with traditional financial products such as bank deposits, the yield of corporate bonds is usually more attractive.
Investors can also reduce the risk of corporate bonds by diversifying their investments, and diversify their funds to buy multiple different corporate bonds, so as to reduce the impact of the default risk of a single bond on the overall portfolio. By choosing corporate bonds with different industries, different ratings and different maturities for investment, risks can be effectively controlled.
The risks of corporate bond investment are roughly as follows:
1. Interest rate risk. Interest rate is one of the important factors affecting bond prices. When interest rates rise and bond prices fall, there is risk. The longer the remaining maturity of bonds, the greater the interest rate risk.
2. Reinvestment risk. Buying short-term bonds instead of long-term bonds will have the risk of reinvestment. For example, the interest rate of long-term bonds is 14%, and the interest rate of short-term bonds is 13%. To reduce interest rate risk, buy short-term bonds.
However, if the interest rate falls to 65,438+00% when the short-term bonds recover cash at maturity, it is not easy to find investment opportunities higher than 65,438+00%. It is better to invest in current long-term bonds and still get a return of 14%. In the final analysis, reinvestment risk is still an interest rate risk problem.
3. Recoverable risk, specifically to bonds with recoverable clauses, because it often has the possibility of compulsory recovery, and this possibility is often that when the market interest rate drops and investors charge the actual increased interest according to the nominal interest rate of bonds, a good cake often has the possibility of recovery, and our investors' expected income will suffer losses, which is called recovery risk.
4. Liquidity risk, bonds with poor liquidity make it impossible for investors to sell bonds at reasonable prices in a short time, thus suffering reduced losses or losing new investment opportunities.
5. Credit risk refers to the losses caused to bond investors by the failure of bond issuing companies to pay bond interest or repay principal on time.
6. Inflation risk refers to the risk that the purchasing power of money will decrease due to inflation. During the period of inflation, the investor's real interest rate should be coupon rate minus the inflation rate. If the bond interest rate is 10%, the inflation rate is 8%, and the real rate of return is only 2%, the purchasing power risk is the most common risk in bond investment.
In view of the above different risks, the main preventive measures are: for interest rate, reinvestment risk and inflation risk, we can adopt the method of diversification, buy bonds with different maturities and cooperate with different securities;
In view of liquidity risk, investors should try to choose bonds with active trading. In addition, they should also think carefully before investing in bonds, and should prepare some cash for emergencies. After all, transferring bonds halfway will not bring good returns to bondholders.
To guard against credit risk and repurchase risk, we must inspect the company when choosing bonds. By analyzing its statements, we can understand its profitability and solvency, operating conditions and the company's previous bond payments, and try to avoid investing in corporate bonds with poor operating conditions or bad reputation. During the period of holding bonds, we should try our best to understand the company's operating conditions so as to make a decision to sell bonds in time.
Investment enterprise bond risk
1 credit risk
Credit risk is also called default risk. Because of financial problems, bond issuers cannot repay investors' interest or principal within the time stipulated in the bond contract. This risk of default may cause investors to suffer huge losses.
2 Interest rate risk
Bond prices are affected by changes in market interest rates, showing a negative correlation pattern. When the market interest rate rises, investors choose other investment products, which will lead to the decline of bond prices. If investors continue to hold the bond until maturity, they will lose the opportunity to get higher returns at the same risk level, so the longer they hold it, the greater the interest rate risk.
3 Liquidity risk
Liquidity risk mainly involves the strength of bond liquidity and whether the holder can sell his shares at a reasonable price in the current market in a short time. If it is difficult to sell, it means that the liquidity of the bond is poor.
4 Inflation risk
Inflation risk, also known as purchasing power risk, refers to the risk that the real value of the principal and income invested by investors in bonds will be lower than the nominal income due to inflation leading to price increase and currency depreciation.
How to choose a good bond fund
When investors buy bond funds, how can they have a rational understanding and judgment of the selected funds? First of all, before investors choose bond funds, they must first have a clear understanding of the classification of bond funds, that is, the investment scope. Second, after understanding the classification of bond funds, investors should choose the bond fund that suits them according to their risk preferences. Third, investors should pay attention to the transaction cost of bond funds while choosing bond funds. Finally, investors should also judge the current market environment when choosing which bond fund.
For different market environments, the investment debt base has different emphases. In the recovery stage of the stock market, you can choose radical debt base with obvious investment style, and the risk-return characteristics are relatively high. In today's volatile market, it is suggested to consider a relatively stable debt base with lower risk.