Common Mistakes Made by Bond Investors

[Suba]

For a long time, bonds have been a popular investment instrument, especially for those with a conservative risk profile. They consider them to be highly secure. They are often government-backed, predictable, allow for steady passive income, and offer a much lower risk compared to stocks and crypto. Furthermore, bonds are also a popular diversification asset for both moderate and aggressive investors.

Unfortunately, many novice investors make common mistakes, preventing them from maximizing profits and even potentially incurring losses, such as:
Ignoring the Bond Issuer's Credit Rating
Not Understanding the Type of Bond Purchase
Ignoring Interest Rate Risk
Not Taking Inflation into Account
Not Diversifying
Focusing Too Much on High Yields
Not Paying Attention to Bond Maturity

 

[Fire&Rain]

Bonds really do look like the calm corner of investing, and I get why beginners lean toward them. The trouble is that people forget bonds can still lose value if you pick the wrong issuer or the wrong maturity. Rising interest rates can knock your price down, and chasing high yields usually hides extra risk. A safer approach is to look at who is issuing the bond, how long you plan to hold it, and how it fits with everything else you own. When you mix different types and balance maturities, bonds do what they were meant to do.