24.7 Lessons learnt

What have we learnt?

Buying bonds can be challenging as things often differ from what they seem to be.

For example:

  • Early redemption
  • Possibility to change/skip an interest payment

As with any other investment, it is essential to determine parameters to decide what bonds fit your investment requirements. With bonds, the parameters should be, what yield am I looking for, what is my maximum duration, and what currencies are out of scope. Also crucial for you to determine a vision of the central bank’s policy regarding interest rates hikes or tapering.

Once you have these factors determined, you can screen for the bond that suits your needs; please keep in mind that bonds are purchased in nominal value, and you always buy and sell as a percentage of the nominal value.

Once you purchase the bond, it will appear as an amount in your portfolio, not as a number of shares or contracts.