How to Make Money on Bonds

gold bonds

You might be wondering how investors devise the best investment plan to make money by investing in bonds. As we are aware, bonds are fixed-income securities that are also known to be debt obligations. Most governments or corporations issue bonds when they require additional funding for their operations.

When an investor invests in gold bonds in UAE or bonds in general, they are lending a sum of money to the company or corporation for a fixed duration. In return, the investor receives a fixed interest paid annually. Once the bond reaches its maturity, the investor receives the principal amount.

There are two ways gold investors in Dubai can profit from holding gold bonds. As discussed earlier, an investor can choose to own bonds until maturity and collect interest payments on the investment. These interest payments are paid out in the form of coupon interests, where investors can earn interests of up to 10% annually.

Another option is to sell the bonds for a higher price than the amount of initial investment.

Investors can choose to buy or sell their bonds in a secondary market, however, this option is risky because the bonds are subject to the volatility of market conditions.

Nonetheless, investors can earn interest paid on the bonds, and any surplus income received at the time of maturity can be strategically reinvested in other bonds. In this way, investors can preserve the maximum amount of their capital. Additionally, one can also benefit from selling the bonds at a higher price for capital gains.

The bottom line is that gold bonds provide a more predictable source of income than stocks or crypto-currencies. A variety of bonds are available in the UAE. These can be both government bonds as well as issued by private institutions. While national bonds offered by the government are more secure, corporate bonds do come with credit risk.

We advise investors to analyse the business prospect of a company and go through the terms and conditions thoroughly before investing. Some corporations, like Bank of Bullion, offer a corporate guarantee on their gold bonds to protect their investors in the event of  insolvency.

For more information on gold bond investments in the UAE, get in touch with our team at Bank of Bullion. Our team of experienced consultants is here to guide you through this investment option and to support you with investing through our regulated trustee.

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