Compared with stocks and funds, investors don’t know much about bonds. If you are doing asset allocation for the entire family, bonds, as a relatively low-risk investment variety, are also a very important component. Master some

Fund’s bond knowledge is still very useful.

What are bonds?

Bonds are a kind of marketable securities, which are credit and debt certificates issued by various social economic entities such as governments, enterprises, banks, etc. to bond investors to raise funds and promise to pay interest regularly at a certain interest rate and repay the principal at maturity.

To put it simply, a bond is a kind of IOU, and the principal and interest are repaid upon maturity. Governments, enterprises, and banking institutions are short of money, so they raise funds from the people, which can be regarded as borrowing money.

Bonds must contain some fund elements, including the name of the issuer, face value of the bond, repayment period, interest payment method, coupon rate, etc., and belong to the rights and obligations between the creditor (the person who lends money to others) and the debtor (the person who lends money)

agreement.

The classification of bonds depends on the issuing entity. Bonds can be divided into government bonds (the issuing entity is the government, and the central government issues treasury bonds), corporate bonds (the issuing entity is a company), and financial bonds (the issuing entity is a bank or non-bank financial institution).

).

Depending on whether the issuance terms stipulate the payment of interest to bondholders within an agreed period, they can be divided into discount bonds, interest-paying claims and coupon-accumulating bonds.

According to different raising methods, they can be divided into public bonds and private bonds.

According to whether there is guarantee or not, it can be divided into secured bonds and unsecured bonds.

According to the different face forms of bonds, they can be divided into physical bonds, certificate bonds and book-entry bonds.

Comparison of bonds and stocks In terms of rights, bonds are just debt certificates and have no rights to participate in operations, while stocks are ownership certificates and have voting rights; in terms of issuance purposes, bonds are additional funds and are liabilities of the issuing entity, while stocks are creation and

Increase capital, which belongs to the company; bonds generally have a specified repayment period, while stocks do not need to be repaid; in terms of income and risk, bonds have a fixed interest rate, and the risk is relatively small, especially treasury bonds, which can be said to have the highest credit rating

Investment varieties, while the dividends and dividends of stocks are uncertain and the risks are relatively high.

Income from investing in bonds The income from investing in bonds is mainly divided into two parts: bond spread income and coupon income. Bond spread income: In the bond trading process, the income from the price difference formed by buying low and selling high. For example, investors

If you buy a bond for 98 yuan and sell it for 100 yuan, you can get a price difference income of 2 yuan.

There are many factors that affect bond prices, such as supply and demand, credit level, liquidity, etc.

This part of the income is uncertain.

Coupon income: When a bond is issued, it is agreed in advance to repay the principal and interest at maturity, and the interest paid is the coupon income.

Coupon income depends on the level of the bond's coupon rate. The stronger the issuer's repayment ability and the better its credit, the lower the bond's coupon rate. This part of the income is relatively certain.