What Are Government Bonds And Should We Invest In Them?Last updated on
The government bonds are a debt-based investment to the country’s government to support its spending. You loan the government your money for an agreed period for a set interest.
The governments use bonds to fund the infrastructure and new projects. The government pays back your money with the agreed interest on regular periods known as the coupon payments. Most governments start to pay you after six months, every month throughout the year.
Should We Invest in Government Bonds?
Yes, we should. If you are looking for a viable investment option, consider the government bonds of your local state or the federal government. Here are the top reasons why you should consider investing in government bonds.
Government Bonds Are Safe
Although the government’s bonds do not give back higher returns compared to other investments, they are known to be low risk. They are considered to be the safest investment because the governments hardly default on their debts.
Investing in government bonds tends to lower the tax burden. In comparison to other types of investments, the interests accrued from the government bonds are not subject to taxation in many countries.
They are Saving Tool
Most traditional savings accounts yield low returns. Placing your money on government bonds helps you save your money and get higher yields in return. It is a way of boosting your savings significantly over a short period.
A government bond gives you a medium to long term low-risk and secure investment depending on your goals. Bonds allow you to effectively save your money and earn decent interests.