Who are the obligations in priority?
The profile of a typical investor who puts his money on the bonds is that the prudent investor looking to shelter a portion of its assets in the market turmoil . However, more and more , because of the sovereign debt crisis in Europe , many speculators entering the market to take advantage of opportunities for quick gains related to financial and budgetary difficulties many states.
What is the main advantage of obligations?
The main advantage is that bonds are risk free because even if a State is unable to honor its debt, it can always refinance other bonds or appeal to international solidarity . The state is , in fact, most of the borrowers because , in fact, it can not go bankrupt. Similar thinking can be applied to bonds issued by public companies or private companies which may be experiencing liquidity is virtually zero .
What is the main disadvantage of obligations?
The main disadvantage of bonds is that they do not allow , under any circumstances , to enjoy such waves of optimism that drive financial markets higher , as stocks or currencies.
However, it should be noted that in order to overcome this situation, the convertible bonds were introduced . Operation is simple: the holder of the obligation may at any time decide to turn his capital into action. The advantage is twofold since periods of declining equity markets , it can retain its purchasing power and , in times of rising , it can take advantage of lower yields through a simple conversion .
the recommendations
Writing strongly recommends investing in government bonds , investment virtually risk in a portfolio diversification strategy . This makes it possible to miminiser market impact on the entire investment made . Several brokers , including Saxo Bank and Etoro , offer to present a wide range of obligations. Two buying opportunities present themselves at this time investors .
Because of the financial assistance to Greece , Ireland and Portugal by the IMF and the EU, buy the debt of these countries is a real interest when we know that the rate of return fight, almost every week , a new record . Although the risk of bankruptcy was put forward for these countries , it seems now totally excluded . For evidence , speculation is strong and every bond , demand is growing rapidly which allows these countries do not have real difficulties in raising money on the market.
Outside Europe, the major U.S. investment banks often advise to buy emerging market bonds . However, the risks are greater , as evidenced by the debt crisis in Latin America in the 80s. Although Venezuela is a country experiencing very substantial financial difficulties, with high inflation , experts consider buying debt issued by the Venezuelan State or debt issued by the oil company PDVSA , which is a public company represents an investment limited and very profitable venture as the yield change around 15%. However, to enter the Venezuelan bond market, it will go through a local broker , since no international bank or broker , or almost no offers its customers the financial asset.
The profile of a typical investor who puts his money on the bonds is that the prudent investor looking to shelter a portion of its assets in the market turmoil . However, more and more , because of the sovereign debt crisis in Europe , many speculators entering the market to take advantage of opportunities for quick gains related to financial and budgetary difficulties many states.
What is the main advantage of obligations?
The main advantage is that bonds are risk free because even if a State is unable to honor its debt, it can always refinance other bonds or appeal to international solidarity . The state is , in fact, most of the borrowers because , in fact, it can not go bankrupt. Similar thinking can be applied to bonds issued by public companies or private companies which may be experiencing liquidity is virtually zero .
What is the main disadvantage of obligations?
The main disadvantage of bonds is that they do not allow , under any circumstances , to enjoy such waves of optimism that drive financial markets higher , as stocks or currencies.
However, it should be noted that in order to overcome this situation, the convertible bonds were introduced . Operation is simple: the holder of the obligation may at any time decide to turn his capital into action. The advantage is twofold since periods of declining equity markets , it can retain its purchasing power and , in times of rising , it can take advantage of lower yields through a simple conversion .
the recommendations
Writing strongly recommends investing in government bonds , investment virtually risk in a portfolio diversification strategy . This makes it possible to miminiser market impact on the entire investment made . Several brokers , including Saxo Bank and Etoro , offer to present a wide range of obligations. Two buying opportunities present themselves at this time investors .
Because of the financial assistance to Greece , Ireland and Portugal by the IMF and the EU, buy the debt of these countries is a real interest when we know that the rate of return fight, almost every week , a new record . Although the risk of bankruptcy was put forward for these countries , it seems now totally excluded . For evidence , speculation is strong and every bond , demand is growing rapidly which allows these countries do not have real difficulties in raising money on the market.
Outside Europe, the major U.S. investment banks often advise to buy emerging market bonds . However, the risks are greater , as evidenced by the debt crisis in Latin America in the 80s. Although Venezuela is a country experiencing very substantial financial difficulties, with high inflation , experts consider buying debt issued by the Venezuelan State or debt issued by the oil company PDVSA , which is a public company represents an investment limited and very profitable venture as the yield change around 15%. However, to enter the Venezuelan bond market, it will go through a local broker , since no international bank or broker , or almost no offers its customers the financial asset.
