In financial markets, not every investment is about high risk and high returns. Some instruments are designed to provide stability, regular income, and capital preservation. One such instrument is a bond.
At Seben Capital, bonds are taught as an essential component of a well-balanced and risk-managed portfolio.
What Are Bonds?
A bond is a fixed-income investment where an investor lends money to a government or a company in exchange for:
Regular interest payments
Repayment of principal at maturity
In simple terms, when you buy a bond, you become a lender, not an owner.
How Bonds Work
When a bond is issued, it comes with:
Face value: The amount repaid at maturity
Coupon rate: The interest paid periodically
Maturity date: When the principal is returned
The issuer pays interest at fixed intervals until maturity.
Types of Bonds
Government Bonds
Issued by governments and considered low risk.
Corporate Bonds
Issued by companies, offering higher returns with higher risk.
Treasury Bills and Notes
Short- and medium-term government securities.
Municipal Bonds
Issued by local authorities for public projects.
Zero-Coupon Bonds
Issued at a discount and pay no periodic interest.
Why Investors Use Bonds
At Seben Capital, bonds are used to:
Generate stable income
Reduce portfolio volatility
Preserve capital
Balance equity exposure
Bonds play a crucial role during uncertain market conditions.
Bond Prices and Interest Rates
Bond prices move inversely to interest rates:
When interest rates rise, bond prices fall
When interest rates fall, bond prices rise
Understanding this relationship is key to bond investing.
Risks Associated With Bonds
Although considered safer, bonds still carry risks:
Interest rate risk
Credit risk
Inflation risk
Liquidity risk
This is why proper bond selection matters.
Seben Capital Approach to Bonds
At Seben Capital, bonds are used as:
Long-term stability instruments
Income-generating assets
Risk buffers during market downturns
They are integrated with equities, ETFs, and other assets for optimal allocation.
What Bonds Mean for Individual Investors
For individual investors, bonds offer predictability and peace of mind.
At Seben Capital, bonds are positioned as the foundation of disciplined investing, especially for conservative and long-term investors.