Investing in Bonds: How and When to Do It

Investing in Bonds: A Comprehensive Guide

Investing in bonds is particularly advantageous thanks to the current high-interest rates.
The current context allows for attractive returns compared to what may be available in the future after a monetary policy easing.
When interest rates decrease, as expected, the yields of future bonds will be lower than the current ones.

Seizing the opportunity to invest in bonds now means locking in higher yields before rates start to decrease.
This period offers the chance to achieve more solid and secure gains.
Taking advantage of this situation allows you to capitalize on current yields and prepare for market conditions change.

What are Bonds and What Types to Know

Bonds are debt securities issued by public or private entities to raise funds.
In exchange, the issuer commits to pay a fixed or variable interest to investors and to repay the capital at maturity.

Here are the main types of bonds:

• Government bonds: sovereign debt securities issued by governments to finance public debt.
  Generally, government bonds are considered among the safest investments in the world, thanks to the state guarantee supporting them.
• Corporate bonds: issued by companies to raise capital.
• Sovereign bonds: issued by international organizations such as the World Bank.
• Indexed bonds: linked to economic indices such as inflation.
• Zero-coupon bonds: issued at a discount and without periodic coupons.

How and Where to Buy Bonds

Buying bonds is a relatively simple process but requires attention.
Investors can buy bonds through:

• Primary issuance: through public auctions organized by the Ministry of Economy and Finance (MEF).
• Secondary market: through financial intermediaries such as banks and online trading platforms.

When deciding to invest in bonds, it is important to consider some limits and key factors:

• Minimum investment amount
• Transaction costs
• Evaluation of risks

Being well-informed about these aspects allows for better management of bond investments, maximizing benefits and reducing potential risks.

Investing in Bonds: Which Ones to Buy Today

Here is a selection of bonds with attractive returns and favorable characteristics that can represent excellent investment opportunities:

• BTP: ISIN IT0005425233 – Coupon 2.42%, maturity 1 September 2051, yield 4.43%
• BTP Valore: ISIN IT0005583486 – Coupon 3.25%, maturity 5 March 2030, yield 3.59%
• BTP Futura: ISIN IT0005425761 – Coupon 0.60%, maturity 17 November 2028, yield 3.38%
• CCT: ISIN IT0005428617 – Coupon 4.362%, maturity 15 April 2026, yield 3.78%

Investing in bonds can be a great strategy to obtain predictable returns with lower fluctuations compared to other types of investments.
The main benefits of bonds include:

• Predictable returns
• Lower volatility
• Capital protection

Investing in bonds involves some risks, but there are tools with a relatively low-risk profile that offer interesting opportunities for prudent investors.