If fixed deposit is too safe for you, you might want to consider a slightly more adventurous investment vehicle- bonds. In other words, bonds can give you better rates than fixed deposit, and since it’s considered an investment, it’s still not RISK FREE. Yes, we do come across very irresponsible “james-bond-agents” that tells you the returns is 100% guaranteed.
Bonds are debts that is given out as loan to the public by government or private corporations, and hence we have government bonds (a.k.a. sovereign bonds) and corporate bonds. Government bonds are usually more secure than corporate bonds, but all these depend on the type of governments and the type of corporations that is offering the bonds. And since money is being borrowed by the corporation/government, they have to promise the public a certain interest rate in return.
Since bonds carry with them the elements of risk, the public must be properly educated to prevent frauds and unwanted losses before making any investment decisions. The Rating Agency Malaysia Berhad is responsible for promoting transparency and instil confidence in the Malaysia bond market while the Securities Commission is responsible for the formulation of policies targeted at developing a vibrant and efficient bond market.
As shown in the Credit Profile Ratings (CPA) below, bonds are rated according to certain guidelines. Once again, investors are reminded, there’s no such thing as a risk-free bond.
The risk involved in bond investment is comparatively smaller than an equity investment, but still, it’s not wise to consider it risk free, since there’s still chance of the borrower might default!
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