While a lot of investors are familiar with the equity market, bonds are less popular in the UK, despite their growing popularity in recent years. Stock markets can be very unstable, especially after the economic recession. The bond market is constantly developing and investment opportunities in the UK are on the rise.
Some investors are cautious of the bond market and fixed income investments. Others are not simply acquainted with the concept of capital bonds and how they work. Whatever the cause of this situation, investors who are interested in investment opportunities in the UK, such as corporate bonds may be best to start their research through an introduction agency, such as Amyma.
What are bonds and why are they a good investment?
Bonds can be described as debt instruments or debt obligations. A company borrows capital from an individual and in return, they offer an advantaged rate. Bonds can be short-lived or last for many years and at the end of their maturity period, the company will all being well return the initial capital to the investor. Most investment companies in the UK and elsewhere offer high-yield bonds that cannot be easily affected by inflation. This is an ideal situation for many types of investors who want to see their capital and interest rate cycle grow.
Yields and currency
Volatility in the currency after the Brexit referendum in the UK, has affected the market to a certain extent. However, government bonds are more sensitive to this type of volatility compared to corporate bonds. The rule of thumb is that as long as there is compensation for credit risk, then corporate bonds will continue to be seen as a worthwhile investment opportunities in the UK.
Considerations for prospective investors
As with every investment, capital bonds and other debt instruments come with certain risks. Potential customers should approach the bond market cautiously and apply their capital thoughtfully. Rushing into a bond without proper research or consulting is not a good idea. However, investors should not be afraid to buy when they think that quality assets are just being mispriced by the market, since there is the possibility to receive higher interest rates in the future.