An introduction to the asset class of bonds: What are bonds and why do they belong in every portfolio?
How the bond price behaves in the event of a change in the interest rate level
The bond price and a change in interest rates are directly interdependent. When interest rates fall, the bond price rises; when interest rates rise, the bond price falls. This behaviour of the bond price is due to the fact that when interest rates fall, the old higher interest coupon becomes relatively more attractive and, conversely, that when interest rates rise, the old lower interest coupon becomes less attractive.
This is illustrated in the graph below:
The bond as an important element of stability in a private investor's portfolio
Genève Invest's four investment strategies and their bond ratios
- Strategy 1: Fixed income portfolio, 100 % exclusively invested in bonds.
- Strategy 2: Income plus yield portfolio, investment of at least 70 % in bonds with an investment in equities of up to 30 %.
- Strategy 3: Balanced portfolio, the bond quota ranges between 30 % and 70 %, usually around 50 %.
- Strategy 4: Dynamic portfolio, the bond quota fluctuates between 0 % and 50 %.
“An experienced investment advisor from Genève Invest can discuss the differences between the investment strategies with you in detail and develop a suitable individual investment strategy together with you by asking specific questions.”
The most important key to success when it comes to strategic investment!
“The investment strategy and its corresponding implementation determine around 70–80 % of the subsequent success of the investment.”
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