The DIY Investor

chapter 13

Corporate bonds and gilts

Less risky than equities but usually returning more than a bank or building society, bonds aim to give a steady income through good times and bad. Understanding bonds is all about understanding risk, and, as with investments across the board, the more of it you are prepared to take, the greater the returns you can hope to get.

Before the credit crunch and the Eurozone crisis that followed it many people hadn’t a clue what a corporate or government bond was. Today we are all too familiar with the idea that nations and other organisations see their borrowing costs go up if the bond markets don’t trust in their ability to pay their debts.

Bonds are issued by governments and companies to raise capital to ...