What is the difference between investment bonds and bond funds?
1. Bonds are debt certificates issued by financial institutions. Investors who become creditors after buying bonds can get interest income and recover the principal at maturity. Bond funds are issued by fund companies. Bond funds usually invest the raised funds in a variety of bonds, and investors can get the benefits of fund appreciation.
2. The risks and benefits of investing in bonds mainly depend on the credit status of the issuer, and bonds with higher credit ratings usually have lower coupon rate. The risk and income of bond funds depend on the investment strategy of the funds. Some bond funds buy some stocks and other funds to seek higher returns, and their investment risks are greater than those of pure debt funds.
3. Bonds usually have a clear maturity date, and investors can hold them until maturity to obtain principal and interest. For some open-end bond funds, investors are more free to purchase and redeem, and the liquidity of funds is better.
How to choose?
1. If you pursue relatively stable income and low risk, buying bonds with high credit rating, such as national debt, may be a better choice. If you want to get higher returns through diversification, bond funds may be more suitable
2. Investors can diversify their investments in different bonds or bond funds according to their own capital scale and risk tolerance, and adjust the investment ratio according to market performance.
3. Whether investing in bonds or bond funds, investors should conduct full research. Before buying bonds, you should know the issuer's credit status and interest payment method. For bond funds, investors should understand the investment strategy and historical performance of the fund.