Investing in bonds can be a wise decision for those looking to diversify their portfolio and generate income. Bonds are essentially loans made by investors to companies or governments. In return for this loan, the issuer agrees to pay interest payments (coupons) at regular intervals and repay the principal amount (face value) at the bond’s maturity date. Bonds are considered less risky than stocks but also offer lower potential returns.
The process of buying bonds in Canada is relatively straightforward. There are two main ways to do so: through a broker or directly from the issuer. When buying bonds through a broker, you will need to open an account and provide them with your investment objectives and risk tolerance. The broker will then help you select bonds that meet your needs. You can also buy bonds directly from the issuer through a process called a primary market offering. In this case, you will need to contact the issuer directly and express your interest in purchasing bonds.
