Investing in bonds
Unlike many countries, Singapore does not need to rely on the issuance of government bonds to finance its expenditure as it operates on very prudent budget. However, in light of the 1997’s Asia Financial Crisis, the Singapore government saw the need to develop the market for bonds so as to meet the banks’ needs for risk-free asset in their portfolio.
One of SG Wealth Builder’s blog missions is wealth preservation and therefore, investing in bonds has always been on my mind. But is investing in bonds suitable for everyone? To answer this question, it depends on which phase of your life you are currently in and the kind of returns you are expecting from your investments.
Generally, for those who are in the twilight stage of their wealth building journey or planning for retirement, bonds offer a source of regular fixed income stream and opportunities for capital gain. But this is not to say that such instrument is safe and of low risk nature. There are certain risks that investors must watch out.
To highlight the risks, many investors were stunned by Swiber Holdings Limited’s swift collapse in 2016. It is unknown whether Swiber bondholders can get back any of their investments.Read more