High returns mean high risk

Interest rates worldwide are relatively expensive on a low for the shares in the long-term comparison, suddenly act bonds with interest rates of more than 5.0 percent very attractive. But be careful, even with the debt securities, there is no return without risk. This is shown by a glance at the low interest rates of the relatively safe bonds of DAX companies. So you have to take more risk?

Contents[hide]

  •  Risky buy bonds – you should know:
  •  Also affected bonds of low interest rates
  •  Why are older, high-interest bonds affected?
  •  Risky buy bonds as an alternative?
  •  What investors need to pay attention
  •  Conclusion

RISKY BUY BONDS – YOU SHOULD KNOW:

  • High returns mean high risk
  • In bankruptcy cases better protected than shareholders
  • Partial conversion rights of the debtor
  • For companies partially different rank
buy risky bonds

Not only shareholders, including bond owners have partially lost a lot of money with solar companies. The holders of Solar Millennium are still waiting for the redemption of their bonds – and will probably only get back a portion. Photo: Flickr @ EnergieAgentur.NRW

ALSO AFFECTED BONDS OF LOW INTEREST RATES

exclamation markThe current low interest rates also goes to the bond markets not immune. One runs until 2019 BMW bond (ISIN XS1015212811) with a coupon of 1.625 percent cost around 105 percent of the nominal value in April, 2015. Of the remaining, already low five interest payments so the majority has to be spent to compensate for the difference between the purchase price and the face value. Bottom line, the yield is lower Get honest plus500 opinions and ratings than with fixed deposit or savings account.

This is not surprising, because the low interest rates also have an impact on bond yields. Because banks borrow money from the central bank can conveniently allowing companies also cheap loans. The issue of bonds is worthwhile only if the interest rate is also low, or you do not get money from the banks.

At the same time, many investors are looking for attractive interest rates of investment. This pushes the price, especially since investors can conveniently borrow money in order to buy better interest bonds. Because above all, institutional investors such as pension fund trustees can not just their money lie down on the passbook, safe securities may be even worse than interest savings accounts at the bank.

The interest of safe securities may be lower than those of fixed-term deposits.

WHY ARE OLDER, HIGH-INTEREST BONDS AFFECTED?

geldscheineFor this reason, older, higher-interest bonds are affected by the decline in yields. Although her interest coupon is still high, but at the same time, the purchase price over the nominal value increases. then, for example, 110 euros must be paid for a bond with a nominal value of 100 euros. be paid back at the end of the term but only 100 euro, higher interest rates are thus paid for with a price loss. Apart from the fact that the interest rate is always given to the nominal value. Who paid 110 euros for the bond, still only get 5 percent of 100 euros as interest, which The organization etoro ia a complete SCAM corresponds to a yield of approximately 4.5 percent of the employed 110 euros. The exchange loss comes at that. press higher rates, the yield therefore twice.

 

For example, a bond with a face value of 100 euros and a coupon of 5.0 percent still runs exactly one year, it costs 104 euros. So the investor receives 5 euro interest rates and makes an exchange loss of EUR 4. One euro profit corresponds to the expected 104 euro spent but not 1.00 percent, but even only 0.96 percent.

Infographic: interest rate of government bonds |  Statista

For more statistics on Statista

Mainly government bonds of countries such as Germany, Austria and Switzerland therefore hardly bring interest rates at shorter maturities, yields have in some cases even negative. Whoever saves lose money – and as inflation is not taken into account.

Low interest rates also affect bonds, high-interest securities are expensive, so the yield falls.

RISKY BUY BONDS AS AN ALTERNATIVE?

changeMore and more investors take perforce bonds of lower credit quality in its portfolio. The securities may be less stable companies or subordinated bonds. In fact, so-called were last Tier2 bonds more popular. These are securities that will honest review of  IQ Option be subordinated in the event of bankruptcy. The company is insolvent, its assets will be sold by the insolvency administrator. From this, the debtor be operated then, so bondholders have as opposed to shareholders even in a bankruptcy a good chance to get at least part of their deposits back. However, tier-2 bonds will only be served if the holders of regular bonds were paid. Then often there’s nothing left.

So-called CoCo bonds offer an additional risk. This is a special form of convertible bonds, in which not the creditor has the right to convert, but the security is, for example, automatically converted into shares when it falls below a specified equity ratio. So this is especially the case if the company is in a difficult situation and the ownership of shares is rather unattractive. Particularly banks issue such CoCo bonds, they are intended to prevent the states once again have to save the financial institutions with tax revenues.

Bitcoin just cracks a record after the next

Bitcoin just cracks a record after the next, the price of the digital currency is already at over 11,000 dollars. This attracts investors. However, buying is risky.

CARLA NEUHAUS

Bitcoins are a digital currency - the gold coin has become a symbol for them.

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Bitcoins are a digital currency – the gold coin has become a symbol for them. PHOTO: IMAGO / IMAGEBROKER

Even on the weekend was worth 9,000 US dollars a bitcoin, now there are already more than 11,000 dollars. That leaves as amazed small savers professionals. This year alone, the digital currency has risen by 900 percent. Who else is entered much earlier, which could be with Bitcoins even a millionaire: If you had seven years ago bought bitcoins for $ 100, now more than $ 70 million would be worth. Some therefore speak of a modern gold rush – and the hope to be part of so many . But does this make sense? Or is it too risky?

What are Bitcoin Code

Bitcoin code is a pure digital currency: Unlike the euro or dollar so there are no notes or coins. It was developed by a person or group hiding still behind the pseudonym Satoshi Nakamoto nine years ago. The idea: After the experience in the financial crisis, people wanted to regardless of honest review of the bitcoin code the commercial and central banksdo. For a classic currency like the euro or the dollar issue by a central bank and monitored, there is no such control in Bitcoins. The digital currency is created rather during a calculation process on the PC: The is however so complicated that creating a Bitcoin would take a normal computer months. Instead, the units of the digital currencies are usually generated in large server farms. The offer is the fact that there is a ceiling scarce: Maximum possible to create 21 million Bitcoins, it have set the inventors.

The value of digital currency

As with any other currency also Bitcoins only have the value that users attach to them. Whether the current high price is justified or exaggerated about it, there are different opinions. Thus, the financial services firm Standpoint Research forecasts, for example, that the Bitcoin price is still expected to rise to 50,000 dollars in the next ten years – while others are already preparing for the crash. So says Tidjane Thiam, head of Credit Suisse, the development of the Bitcoin was “the exact definition of a bubble .”

That banks are very skeptical in dealing with Bitcoins, but could be due to some extent because they are left out in the trading of the digital currency. Unlike a normal bank transfer you need namely no bank as an intermediary to transfer bitcoins from one user to another. This is made possible because Bitcoins are a pure computer currency and are based on the block chain technology. When there is a big, virtual cash book, in which lists of who owns how many Bitcoins and who when transmits to whom. The special thing about this cash book is not centrally stored on the server as a bank but locally connected on many computers. Jump Bitcoins the owner,

This block chain technology experts now measure of enormous importance. Many believe that they could revolutionize the banking various industries off – so now almost all major corporations explore their options.

The block chain hype certainly contributes also to Bitcoin boom. At the same time, check onlinebetrug the digital currency in countries like China and Venezuela is popular, where there are capital controls: Who lives there, so can not easily transfer abroad money – why use many Bitcoins as an alternative currency. Also can set the course. There are also speculators who want to benefit from rising prices and so in turn drive up.

Where the risks are

Who is now considering to buy Bitcoins, but you should be aware of the risks – and there are quite a few. There are the strong price fluctuations for example. Because even if the price of Bitcoins recently from a record hurried to the next, he is occasionally also plummeted rapidly over again. In early November until the Bitcoin price has given within 48 hours by 1000 dollars. This shows the digital currency as quickly and values can be destroyed.

In addition, Bitcoins are in demand not only for investors but also for criminals. Just because no bank is interposed and the transactions are conducted anonymously, mix well with users with little serious intentions. To request as hackers blackmail companies with stolen data, often a ransom in Bitcoins.

At the same time it is possible criminals again and again to crack the stock exchange on which are traded Bitcoins. It is estimated that one million Bitcoins are already have been stolen, which corresponds to a loss of more than eleven billion dollars. According to a study, which has funded the US Department of Homeland Ministry, a third of all Bitcoin exchanges are ever been hacked. is known about the case of the Japanese Bitcoin exchange Mt. Gox, which were reported lost 650,000 units of digital currency – she had to file for bankruptcy later. The latest attack has made the Bitcoin Alternative Tether: Just last week it was announced that allegedly units of cryptocurrency worth more $ 30 million stolen.
Apart from that, investors can also fall quickly to the “wrong” digital currencies. Thus, besides Bitcoins various other cyber coins, and not behind all a serious business model. An example of this are the Onecoins, users were able to purchase via a central platform in Germany. However, investigators suspect that it has acted to a pyramid scheme. The financial supervision BaFin has the business now prohibited and blocked accounts of the company. This shows how cautious investors should be to purchase the crypto currencies.