Diversify your Portfolio with Bonds

In times of market volatility and uncertainty, where the Stock market is all over the place and alternative investments are being grounded due to the global pandemic that is Coronavirus, investors often opt for stable and reliable instruments like Bonds.

When a government, public authority or company wants to raise money, what does it do? One option is to issue fixed-income securities, or bonds.

Bonds can be defined as loans made by investors to an issuer, with the promise of repayment of the principal amount at the established maturity date, as well as regular payments which represent the interest paid on the loan. The purpose of such loans ranges widely. Bonds are typically issued by governments or corporations that are looking for ways to finance projects or operations.

In simpler terms, a bond is a fixed income instrument that represents a loan made by an investor to a borrower, typically a corporation or a government. It is regarded as a long-term financial obligation or a secured loan.

Why Invest in Bonds

Unlike several investment products, Bondholders are the first to get repaid if a company encounters financial problems, so it is very secure. This makes them very attractive to cautious investors who are seeking better returns than those available from cash products. It also helps investors avoid the risks associated with investing in Stocks. Among other things, Bonds also has the following benefits:

• Low Risk- compared to Equities
• Fixed and Regular Income
• Capital Appreciation

Bonds may be a suitable investment for you if:

1. You want to invest in a product that guarantees the principal amount with interest upon maturity;
2. You want to diversify and build a resilient portfolio
3. You expect a guaranteed return. See more Frequently Asked Questions on Wealth.ng

What you need to know about Bonds

• Bonds are long term debt instruments
• Bonds are listed on the stock exchange and are therefore tradable
• Government bonds are tax free
• Government bonds with 3 years maturity or less qualify as liquid assets
• Fixed income can add diversification to your portfolio, thereby making it more resilient.

Types of Bonds

The following are some common categories of simple bonds:

• Fixed Rate Bonds: Bonds that pay bondholders a predetermined fixed interest amount on periodic payment dates during the life of the bond up to the maturity date.
• Floating Rate Bonds: Bonds that pay bondholders a floating or variable interest amount on periodic payment dates during the life of the bond up to the maturity date.
• Zero Coupon Bonds: Bonds that do not pay bondholders a regular interest amount during the life of the bonds. Rather they are sold at a discount and pay the bondholder the principal amount at maturity.(Similar to Treasury Bills)
  However, please note that on Wealth.ng, investors will be paid interest for holding the bond at the end of every year depending on the tenure invested.

Perks of Investing in Bonds

• An alternate form of investment
• Returns are higher than inflation rate thus good for long term investors
• Multiple sources of income

Okay we are done here, so head over to Wealth.ng and get started.

• Login/signup on Wealth.ng
• Go to the investment tab or marketplace, select the Bonds that you’re interested in(Fixed Income)
• Remember to pick the tenure too
• Enter the amount you’re interested in buying — Minimum Investment of N100,000 is required.
• Add to cart, checkout and pay!

Voila! You can now view your Bond investments in “My Portfolio” page and watch your interest accrue.

Frequently Asked Questions

· Minimum Investment: You can start investing in bonds with a minimum subscription of N100,000.00.

· What Tenures and rates are Available?: Generally, bonds are issued as 2 years bond, 5 years bond, 10 years bond and also 30 years bond. You can access Bonds from 3 years on Wealth.ng and start enjoying the better life.

o 3 Year Bond — 7.80%

o 4 Year Bond — 7.80%

o 5 Year Bond — 7.35%

NB: Please note that rates are subject to change without notice, depending on the market demands.

· Interest: For Bonds on Wealth.ng, investors will be paid interest for holding the bond at the end of the investment tenure. However, at the end of every year, the accrued interest for that year is paid directly into the users cash balance and the interest for the new year starts to accrue.

· Liquidation: You can sell your bond at any time before it matures. However, please note that you can break your investment with a little fee of 1%. The fee is removed from the accrued interest, and the remaining amount is sent to the user’s cash balance. Similar to other investments, we advise that you cultivate the savings culture and let your money grow before you take it out. Besides, the longer you leave it, the higher your returns.

For more details, Please visit the FAQs section