Tuesday, 22 August 2017

Top government bonds to invest for 2017

Posted by Valentine at 13:40 Labels:

I am sure you have heard about government bonds. Before telling  you which are our top picks for this year, let’s refresh some key knowledge about this type of asset.

A few facts about government bonds

A government bond is a debt security issued by a government to raise money for spending. In the United States, bonds are issued by the Treasury, while in other countries, it could be central banks or other organisms responsible for such operations.

This class of assets are very popular among investors, especially those looking for passive or low-risk investments, as well as those who just want to protect against market instability.

In case of government bonds, you are lending money to your country for an x period of time for which you receive an x interest rate depending on the involved risks.

It is recommended that before putting your money into bonds, you understand there are economic, political and social risks behind them. For instance, unstable governments that are likely to fall into default would pay higher rates than those with great financial records.

With most government bonds, traders are basically working risk-free. But of course, returns are nothing to be really excited about as they mostly offer low rates.

Why government bond ETFs?

Most government bonds can be bought from an extensive list of brokerages, banks and agencies, with the exception of US Treasuries, which are purchased directly from the US government via its website.

Another way is to use exchange-traded funds (ETFs), which is a much simpler and faster way to invest on bonds. And don’t worry... bond ETFs also pay interest through a monthly dividend, while capital gains will be seen on an annual dividend.

Top picks for 2017

SPDR Bloomberg Barclays Long Term Treasury ETF

Vanguard Extended Duration Treasury ETF

PIMCO 25+ Year Zero Coupon U.S. Treasury Index ETF

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