Anthea Gardner of Cartesian Capital gave an extremely interesting talk on bonds in the Cartesian Talks webinar on 17 June 2020. If you’ve been wondering what’s so attractive about this particular type of investment, the answer is… “plenty”.
Essentially a bond is a debt instrument issued by a company or government. By purchasing a bond, you are effectively lending money to the company or government in question. You will receive interest over the term of the bond at a pre-determined rate (either fixed or variable) and then receive your initial investment (capital) back at the end of the bond term.
“Bonds tend to be viewed as less sexy than equities, but there is a definite place for them in all investment portfolios,” says Anthea. “The great thing about bonds is their predictability. You know when you buy a bond what you are going to earn, and when. This makes it an extremely attractive option for investors who are looking for a medium- to low-risk investment.”
Even though South Africa as a country has a non-investment credit rating with the global ratings agencies, putting your money in government bonds should not be dismissed.
“Sometimes non-investment-rated bonds are referred to as ‘junk bonds’, but this name is deceiving,” says Anthea. “A more appropriate term is ‘high-yielding bonds’. South African government bonds have yielded excellent returns over the years.
“It’s important to note that some countries’ government bonds have negative yields, which means you actually have to pay to invest in them.”
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featuring Anthea Gardner
You can invest in bonds by buying certain ETFs, or through your stockbroker or financial advisor. Remember always to gather information about your investments wherever you can and to ask questions and seek out advice from trustworthy sources.
Watch the recording of the Cartesian Talks episode on bonds here.
The next installment of Cartesian Talks will take place on 25 June 2020 at 11am. Anthea will be talking to political analyst Judith February about the rand and all the things that influence its value. Click here to register.
Anthea will also be speaking at a TEDx event this Saturday, 20 June 2020, which will be broadcast via the web. You can find out more and book to watch it here.