3. Buy-back option of bond issuer

Another unique aspect of bonds is the buy-back option that some issuers include in the bond investment terms. This allows the issuer to redeem the bonds before the maturity date in response to market performance or falling interest rates. An investor must evaluate this aspect while choosing bonds to invest in.

4. Debt Obligations of Bond Issuer

Bonds are issued by companies as a loan, so technically investors are lending their funds to the bond issuer. So you should evaluate the bond issuer like anyone else you would be willing to give a loan to. The issuer should have a strong ability to return the principal and interest as promised. In order to evaluate this, investors must track past, present and future expected financial performance of the issuing company.

5. Whether a bond is secured.

One of the most important factors while investing in bonds is to check if it’s secured or unsecured. This determines whether you will get your money back in case the company defaults or claims insolvency.

Conclusion

Yes investing in bonds is considered to be safe. However, as investors, we must look at several factors before making our investment decision and even throughout the time we hold the bond so that our investments are safe at all times.