Bonds are the debt securities, issued by governments, financial institutions, companies or other financial bodies. When buying bonds, the investor lends funds to the bond issuer. The issuer undertakes in the predetermined periods to pay interest to the persons having acquired these securities, and in the end of the validity period of the bonds to pay out their nominal value. Bonds are associated with relatively small risk, but profit is also not high.
By investing in bonds you know in advance the debt interest rate (coupon bonds), their payment method, frequency and maturity (the bond redemption date).
- By investing you immediately know what return you get if you retain the bonds till their redemption date.
- If necessary, you can sell the acquired bonds in the secondary market before their redemption date.
- The bond price in the secondary market depends on the current market interest rates, so there are opportunities to get return without holding the bonds until their expiry date.
Interest on bonds
The bonds can be remunerated at fixed or variable rates. There are two interest payment options:
- At specified intervals throughout the duration of the bond;
- At the end of the bond period.
Select sum of money to buy the bonds according to your investment objectives and financial resources. In some cases, the minimum number of the bonds available for purchase (for example, by investing in Eurobonds, foreign debt securities) is set.
When you buy a bond, on the contrary to what many thinks, you have to fully assess risk of the company which is issuing the bonds, as if you buy the company's shares. As an exception the state bonds can be regarded, because the states go bankrupt much less frequently than the companies.
In the secondary market, like in the case with the shares, bond prices (yields) depend on their liquidity, i.e. the opportunity to turn them into cash as soon as possible and at the lowest possible cost. The more liquid are the bonds, the more likely they can be marketed easier and without major losses.
Bond price movements in the market depend on the time before their redemption. The bonds with longer time till redemption date are more sensitive to interest rate changes in the market. Having invested in longer-term bonds, you can earn or lose more if they are sold without waiting for the redemption date.
How do I start investing?
1. First of all, you have to sign a contract for the provision of investment services and open a securities account in any unit of Šiaulių bankas.
2. Submit order to buy or sell bonds:
- By logging into securities trading platform: it is convenient to monitor and manage your securities portfolio;
- Through financial brokers of Šiaulių bankas.
Where to go?
The most convenient way is to fill this request form, and the required specialist will contact you.
For more information about these investment instruments, conditions and fees call 1813
(+370 37301337 when calling from abroad).
The information contained herein is only a presentational marketing message. It cannot be regarded as an offer to buy any financial instruments, to sell them and/or to conclude the transaction(s).
Please note that investing involves certain risks, so before making an investment decision, you have to take into account the fact that, under certain circumstances, which are independent of will and action of Šiaulių bankas AB, your investment value may drop. Šiaulių bankas AB is not responsible for your decisions taken on the basis of the information contained herein.