Benefits of investing in government bonds

Safe investment

An advantage of putting government bonds in your portfolio is that they are a relatively safe investment , although not so much when compared to putting the money in bank deposits. Bond values ​​do not tend to fluctuate as much as stock prices, so you are less likely to worry about their potential fluctuations in value . Although if what you are really looking for is security, the most appropriate option is to bet on savings accounts or long-term bank deposits.

Predictable income stream

Another benefit of bonuses is that they offer a predictable income stream . Because bonds pay a fixed amount of interest twice a year, that money can generally be trusted to come in as expected. Government bonds and Treasury bills offer the added benefit of paying tax-exempt interest to varying degrees.

An investment in society

On top of that, some investors like municipal bonds because they offer the opportunity to invest in the company. When you invest in a government bond, you can help improve a local school system, build a hospital, or develop a public garden. It’s that social angle, combined with the potential for completely tax-free interest income, that causes some investors to forgo the higher interest rates of other corporate bonds and invest in government bonds.

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