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?


  •  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


  • 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


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.


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.


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.