How do retail investors invest in bonds?
1, buy directly. Retail investors can directly purchase bonds such as government bonds and corporate bonds through banks, securities companies and other channels. The advantage of direct purchase is that you can freely choose the variety, term and interest rate. Bonds, and you don't need extra service fees. The disadvantage is that you need to have certain investment experience and analytical ability, and the risk is relatively greater.
2. Indirect investment. Retail investors can also indirectly invest in the bond market by purchasing bond funds and wealth management products. The advantage of this method is that they can entrust professional institutions or fund managers to invest in bonds, which saves time and effort and is more efficient. The disadvantage is that you can't control your own investment and need to pay extra fund transaction fees.
Are bonds risky?
Generally speaking, the risk level of bonds is lower than other financial instruments such as stocks, but this does not mean that bonds are risk-free. The risks of investing in bonds mainly include the following aspects:
1, interest rate risk. Changes in market interest rates will lead to fluctuations in bond prices. Generally speaking, when the market interest rate rises, the bond price may fall. This kind of risk mainly affects investors who buy and sell bonds during the holding period, and the decline in bond prices may lead to losses when selling.
2. Credit risk. Bond issuers may be unable to repay the principal and interest on time for various reasons. Generally speaking, the lower the credit rating, the higher the risk of default. Credit risk may cause investors to be unable to recover their funds, or the recovery time may be extended.
3. Liquidity risk. This kind of risk mainly affects investors who need to sell or transfer bonds in advance, which may lead to the failure to close the transaction in time.