November 23, 2020

Investing for beginners: Investing in bonds

BOTS wants to ensure that everyone in the world has the opportunity to build up a second passive income through investment. Not everyone has experience with investing yet. That is why we are now sharing more information every week in our "Investing for beginners" series.

Investing for beginners: investing in bonds
Investing for beginners: investing in bonds

Investing for beginners

Last time we shared more information about shares in our series "Investing for beginners". What types of stocks are there and why do people choose to invest in stocks?

You can read the whole article back here.

Today we focus on investing in bonds for beginners. What kind of bonds are there and how do you actually make a profit with bonds.

Investing in bonds

Investing in bonds is often seen as a relatively safe form of investment. But what is a bond?

Very briefly, a bond is a loan issued by a government or by a company. So you actually lend your money to this company or to this government and you receive coupon interest on it. Just like shares, bonds are negotiable on the stock exchange.

Types of bonds

Although there are several types of bonds, today we name the two most well-known types of bonds.

Government bonds: A government issues government bonds mainly to cover shortfalls in financing or the budget. Because governments generally do not go bankrupt quickly, government bonds are seen as the least risky type of bond.

Corporate bonds: As the word suggests, corporate bonds are issued by companies. The interest and the repayment depend on the creditworthiness of the company in question and therefore these bonds are considered more risky than government bonds.

Why invest in bonds?

There are two ways you can make a profit when you invest in bonds. This can be done by means of the coupon rate and by means of the price.

Coupon interest: When you buy a bond, you lend out your own money. You will receive a compensation for this. This is called coupon interest. The amount of this interest depends, among other things, on the creditworthiness of the company or government from which you buy a bond. The rule of thumb is often: if there is a good chance that the company or government can repay the bond, the lower the coupon interest rate. This interest rate can be fixed or variable.

Price gain: If you buy a bond on the stock exchange, you pay a certain price. This price is expressed as a percentage. This price depends, for example, on the creditworthiness of the company or the government issuing the bond, but also on the market interest rate and the then prevailing sentiment. As a rule, you can say that if the creditworthiness decreases, the price of the corresponding bonds will also decrease.

The BOTS app and bonds

Our investment focus for now is on crypto funds. And we do this in an automated way. With bots. In our BOTS app, you can choose a particular bot. This bot is developed by specialized developers and works through algorithms, artificial intelligence and machine learning. This eliminates the need to invest via a (digital) fund manager. So you don't pay for the costs they incur to be able to invest for you. In the long run, we do not only want to offer crypto investments, but also shares, bonds and investment funds.

The efficiency that a bot achieves, compared to a human being, is significantly higher. A bot does not sleep and can therefore react directly to changes in your cryptofound. Also, a bot has no emotion that partly determines how your investments are handled.

In this way, investing with higher returns becomes feasible for everyone. The best trading strategies were only available to the richest 3% in the world. Because of our bots now also for you. You can start within 2 minutes and from € 50,-.

Investing is for everyone

Everyone should be able to invest. And now they can. With BOTS. Together we are going to make the world of investment fairer and more transparent. Are you interested, but your question hasn't been answered yet? Take a look at the FAQs on our site. Or contact us, we will be happy to explain it to you in person.

The BOTS app is now live

Download the BOTS app on your mobile phone today! For Android click here, for Apple click here.

There is no such thing as risk-free trading. It is possible to lose (part of) your stake.