Investing in Bonds during Recessions: Risk free Investment

By Charles Hopkins Published 01/22/2009 | Finance
Which is the best option to invest in the present circumstance of economic turbulence? Is it share markets? Is it real estates? Whether one has to opt for investing in gold coins? How are mutual funds? What about investing in money? Many a times the answer to these questions will be discouraging. At last they may come up by asking how about investments in Bonds during the period of recessions?

The ideas of investing in bonds during recessions are not bad. There are many reasons for this. The prime reason is that there are no other safest investments opportunities now. How can anybody invest in stock markets which are so chaotic? What is the guarantee that you will get back at least the amount you invest? The fluctuations in the stock markets are very high. Even an experienced investor or economist will not able to predict the market. So the investments in stock markets are very risky now.

What about the real estates? No investors will dare to invest in the real estate market now. The number of foreclosures has surpassed the record. The mortgage banks have opted for bankruptcy. The home owners are under constant threat of their houses. Buyers are keeping away from the market. Is there any viability in keeping faith on real estate investments?

In this situation what is the best investment opportunity? Investing in bonds is the perfect option for the investors looking for safe and good return investing opportunities. There are many varieties of bonds in the investment markets. There are long terms bonds as well as short term bonds. Long terms bonds offer lock in period of about 10 years while short term bonds offer 2 year tenure. As expected long term bonds carry more interest while short term bonds offer average return. The selection will be left to the investor. Most government bonds are very safe. They all performed well in the past. There are no reasons to change the situation. The credibility of the Bonds is very high.

There are many tax free bonds such as tax free municipal bonds. Long term treasury bonds are also good option. Most of these bonds are inflation protected. Nevertheless these bonds offer you a perfect and constant yield whatever is the states economic condition.  You have to do a perfect research in identifying the best bond option matching your requirements. High quality bonds in short term are preferable options for the average investors. Long term bonds can be thought of for huge investments. You have to consider the risk factor and inflation while deciding up on the investment option in a specific bond. In any case the investments in the bonds are in rise and it has been perceived as one of the safest investment option.