The main risks when investing in bonds include:
- Risks related to the underlying bond: The company issuing the underlying bond might default on its obligations.
- Market risk: The value of the investment may decline due to events outside the control of market participants, such as an economic downturn, a financial crisis, or geopolitical events.
- Interest rate risk: Changes in both short and long-term interest rates may affect the value of financial instruments.
- Inflation risk: Changes in the inflation rate affect the purchasing power of future interest and principal payments.
- Liquidity risk: Bonds have a fixed term, with the principal being due at maturity. Investors who want to sell their investment early can only do so on the Mintos Secondary Market. There is a possibility that investors might not be able to find a buyer for their investment, or that they can only sell the investment at a lower price.
You can read more about the risks in our risk disclosure.