Bonds Investing

Investing in bonds

What is a Bond?

A bond is a debt security issued to raise funds. It is kind of like a bank loaning money except that this time you are the person giving out the loan at a promised rate of return.

Bonds used to look like this

Types of Bonds

  1. Corporate bonds: issued by companies
  2. Government bonds: issued by governments


What do You receive as a Bondholder?

  1. Interest payments (coupons)
  2. Your principal sum on maturity (par value)



Bonds used to be perceived as low-risk investments which tends to move opposite of interest rates & shares. A typical asset portfolio in the old days would consist of shares & bonds.

However, today bonds are at risk of failure from companies (and even governments!). Depending on the bond rating, bonds can range from a low-medium to high risk investment.


Bond Ratings

There are 3 major bond rating agencies that assign a creditworthiness score to bonds issued.

  1. Moody’s
  2. Standard and Poor’s
  3. Fitch Ratings.



Buying Bonds

It has become easier for individual investors to buy bonds in recent years. However, bonds still require typically $25,000 (RM100,000) and above to invest for some degree of diversification. If you have a smaller amount to invest, consider bond funds.


Bonds Consideration

  • Credit Rating
  • Price
  • Maturity
  • Yield-To Maturity (YTM)


More Info

  • FSM Bonds (
    Bonds from RM10,000 and for sophisticated investors only

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