UAE’s retail investors have by now got the feel for stocks – how about bonds, treasury bills?

UAE’s retail investors have by now got the feel for stocks – how about bonds, treasury bills?

When it comes to investment strategies, diversification is crucial. While bonds and treasury bills are often seen as a way to protect against inflation, there is a possibility for inflation to surpass the interest rate on these bonds. As a result, these bonds may only partially shield you from inflation. Nonetheless, investing in bonds and treasury bills can still offer a fixed rate of return typically higher than inflation, allowing the investment to grow over time and provide a dependable source of income that can help mitigate the impact of rising prices. By researching and equipping oneself, investors can make informed decisions to enhance their financial portfolios and achieve long-term investment goals.

Understanding bonds

Bonds are debt instruments issued by governments, municipalities, and corporations to raise capital. When an investor purchases a bond, they are essentially lending money to the issuer in exchange for regular interest payments and the return of the principal amount at maturity. Bonds are known for their fixed-income nature and are typically considered less risky than stocks.

Government bonds are considered one of the safest investment options. They provide a steady income stream and are backed by the government’s ability to tax and print money. These are often categorized