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Bonds

$5.5t USD in negative yielding government bonds!!

JP Morgan estimates that over $5.5t (yes, trillion) of investor funds are currently in negative yielding government bonds. To put that into plain interest, if you purchased $10,000 (Euros to be correct) worth of German 5 year bonds currently at -0.308%, after 5 years, your $10,000 would be worth $9,846.94. To clarify, this doesn’t mean that the quarterly interest payments are negative, it means that the amount an investor is prepared to pay for the bonds is so expensive, that when it matures; combining the capital being repaid (the face value) and any income generated works out that the ‘total return’ or […]

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Bonds 101

  Bonds are typically a word most investors have heard of, but it is an investment that is not fully understood. Shares however, are generally well understood, investors know they can fluctuate in value, they sometimes pay a dividend, they can be risky. Bonds are seen as ‘safer’ investment options, but that is not always the case. Bonds versus Term Deposits Comparing a bond to a term deposit from a major bank; a term deposit is an agreement from the investor to lend a specified amount of money to the bank, with an agreed interest rate, with agreed repayment terms. Throughout […]

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