There are a few main reasons:
- You get paid first.You’re a creditor to the company, they will pay bond holders before stock holders.
- You have a contract to get regular payments. Companies can skip on dividends for any reason. They can’t skip on paying their bond coupons.
- You’ll get your initial investment repaid. The bond has a specified term and you get your full investment repaid at maturity.
- In the rare case the company goes bankrupt, bond holders get repaid in full before stock holders see a cent.
Bonds will also give you a regular income. From the large, household name Australian companies you know and trust. Even when the company stops paying dividends.
For example, one of our clients purchased $30,000 worth of NextDC 6.25% back in July 2018. They earned $937.50 every 6 months, even during the COVID-19 market crash. Their entire $30,000 investment was repaid in full in December 2020.
Bonds enable you to:
- Receive a regular and reliable income on your investment
- Sleep at night without worrying if a company will pay a dividend
- Own an investment that stays more stable that stocks
- Plan your income with certainty by using the industry standard of stable investments
- Live your life without keeping one eye on the stock market ups and downs
Choose Australian Corporate Bonds
Every single super fund uses bonds as part of their portfolios because they offer:
Security – You will get your investment back at the end of the bond term.
Competitive Rates of Return – Regular high interest returns usually more than dividends or term deposits. And unlike dividends that can be canceled, the company promises to pay the interest owing.
Flexibility – The Australian Bond Exchange allows you to own the bond, collect the full interest, and sell them on the exchange before they mature. This gives you the flexibility and has no lock-in like other investments.
Set Fees – We change only a brokerage fee. No hidden, extra or additional charges that chip away at your nest egg.
Terms to Suit You
- Lock in a fixed rate bond and you know exactly what interest you will be paid every 6 months so you can plan your income
- Choose a variable rate bond to take advantage of any interest rate increases in the future and protect your capital
- Choose an inflation linked bond to ensure that the value of your money is maintained even if inflation gets out of hand
- Or, choose a selection of all three so that no matter what happens in the future, you will always have peace of mind
If you want a stable investment rate while still receiving regular returns from some of Australia’s biggest and best companies then you need to invest in corporate bonds.
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