Bonds

• The most common bonds are loans to governments or corporations.  Bonds provide a fixed income in a form of interest paid semi-annually or annually.

• Capital on bonds are not repaid until maturity.

• Since bonds pay a fixed interest from issue, the risk is that bonds do not keep up with current interest rates.

• When bonds are purchased the bond value will fluctuate.  If you need access to the funds prior to maturity you could risk a capital gain or loss.

• There is no capital guarantee and the issuer of the bond could default.

• Bonds in a different currency will encounter risk due to currency rate fluctuations.

• Term of bonds vary and can range from a few months to greater than 20 years.  You can select a bond that’s in line with your investment time.

• There are no explicit charges on bonds but there are commissions to be paid on purchase and sale.

• Income paid by bonds is liable to income tax, USC and PRSI but is not liable for DIRT at source.   In some instances bonds can also have a capital gain which would be subject to Capital Gains Tax.

• Bonds are for investors seeking a fixed income for long periods of time.

• Bonds can also be a part of a portfolio to reduce risks from stock or market risk.