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Blog #43: Are Bonds Really Zero-Risk Investments?

Bonds are often touted as being very low-risk investments. Some would even go so far as to call them risk-free. But is that really the case? All investments come with risks to balance out their rewards, and bonds are no different. Here are a few of the risks you take on when you invest in bonds.

Interest Rate Risks

This is one of the best-known perils of bonds. The relationship between a bond and the interest rates in the market are complicated, but basically, supply and demand are at play in influencing the interest rate on the bond.

A bond you invest in might decline in value if interest rates rise. Yikes!

Inflation Risks

A bond is worth a fixed amount of money. If you invest 10,000 dollars in a bond, when it’s paid back to you, you’ll get 10,000 dollars.

Seems straightforward and risk-free, right? Nope!

You must remember that inflation is a factor in every economy. 10,000 one year is unlikely to have the same purchasing power five years from the date the bond is issued. In that way, there’s a good chance your bond is going to decline in total value, and that means money out of your pocket.

Default Risk

If you invest in bonds for a corporation, and that company goes under? Who knows what you’ll be getting back.

If the bank repossesses the assets of the company you’ve given your money to, well, that’s simply not your money anymore. It’s gone.

Takeaways?

Bonds aren’t the riskiest investment, sure, but they do come with their own set of risks. And that low risk deal that you think you’re getting also tends to come with low value and minimal rewards.

Bonds aren’t a terrible investment, but they’re not necessarily the best one.

Real estate, on the other hand, is a great investment choice for anyone who wants to see their wealth grow surely and steadily. No matter what happens, if you invest in real estate, you can rest easy knowing that there’s a solid piece of land behind your money.

 

 

Lea and Lefry Amarille are real estate investors. They have been actively involved in the GTA and Durham Regio for a number of years. Their mission is to provide great quality homes for tenants, while at the same time providing an above-average return on investment (R.O.I) for their investor partners and themselves.  It is truly a win-win-win way of investing!

Lea and Lefry offer their investor partners hands-free investment opportunities. If you are interested to learn how to earn an above-average return on your investment, backed by a solid asset, and without the hassle of being a landlord, please contact Lea and Lefry

For more information about Lea and Lefry and their investment program,
please call (416) 827-0586 or visit  https://investorleaandlef.com/

Blog #42: Investing in Mutual Funds vs Real Estate

In any investment, there’s a certain level of money you have to put in before you see a return. That’s kind of the point of investing: you put something in to get something more out. It’s not free money, it’s putting your money in the right places to turn it...

Blog #41: The High Cost of Mutual Funds

In any investment, there’s a certain level of money you have to put in before you see a return. That’s kind of the point of investing: you put something in to get something more out. It’s not free money, it’s putting your money in the right places to turn it...

Blog #40: Real Estate Makes Money (Without You Lifting a Finger!)

You want to make investments that are going to pay off. That’s kind of the point of investing, right? With the stock market, there are a few ways to see some payoff. It’s fairly easy to sell stocks, and if you sell them for more than you paid for them, then that’s a...

Blog #39: Your Money: Save it or Invest to Impress?

If you’ve got some extra money sitting in your savings account, you may be tempted to let it sit and collect interest (and dust). Although this may seem like a promising starting point, investing in real estate is where the best of investors typically hit a home run....

Blog #37: What is Private Capital?

Private capital lending is an alternative strategy for real estate investors to enter the property market, but what is private capital, who can use it, and what can they use it for? Private Capital Definition Private capital is an umbrella term for investment loans...

Blog #36: Why Real Estate is Better Than Cryptocurrencies

We all know investing is the best way to secure our financial future but finding the right investment vehicle can be challenging. Cryptocurrency has been trending of late but is this where you should be focusing your efforts? We discuss why your investment dollar is...

Blog #35: Why Real Estate is Better Than Mutual Funds

We've all heard the advice that diversifying your investments is the best way to protect yourself should one of your investment channels bottom out. It's good advice, but there will always be investments that consistently perform better than others. This article will...

Blog #34: Why Real Estate is Better Than Bonds

Bonds are a relatively secure investment option, but safe choices in the money market rarely produce an attractive return. In contrast, real estate often outperforms bonds by a significant margin, especially over the long term. This article compares bonds against real...

Blog #33: Why Real Estate is Better Than Stocks

Why Real Estate is Better Than Stocks Stocks are a straightforward, no-fuss investment strategy for putting money away for the future. However, the stock market has inherent risks that can put investors at a significant disadvantage compared to real estate investing....

Blog #32: Real Estate Market Fundamentals: Interest Rates

So, what happens to real estate investments when interest rates rise? With the global economy in its current state of disarray, inflation is trending upward at an alarming rate. It was only a matter of time before the reserve bank stepped in to flatten the curve with...

Blog #31: Real Estate Market Fundamentals: Demographics

Many variables will influence your property investment decision when considering your options. Demographics is just one, but it has a critical role in adding value to your property portfolio through making good choices. Learn more about how demographics will influence...

Blog #29: Real Estate Market Fundamentals: The Local Economy

The housing market often reflects what's happening in the economy. When times are good, there's money in the economy to invest in housing. If times get tough, the Federal Reserve may intervene to reduce the pool of spending money. Unfortunately, when the Federal Bank...

Blog #28: What Happens to Real Estate During Inflation?

Many investors regard real estate as one of the best strategies to hedge against inflation because property prices over any given decade tend to trend upward. This article will discuss why inflation occurs and how it can affect your real estate investments. What is...

Blog #27: Mutual Funds: Eggs in Too Many Baskets?

Investing in a mutual fund might seem logical. It’s an opportunity to let a seasoned investor decide where your money goes, and typically, the investments made by a mutual fund are fairly diverse. That is to say, they fall into a variety of markets, and as such you...

Blog #26: Stocks Are a Gamble

Stocks are probably one of the first things you think of when you think of investing. The stock market is a big, well-known path of investing. But just because something is popular doesn’t mean that it’s the best thing! Stocks, like any investment, come with a set of...

Blog #23: Real Estate vs. Money in the Bank

Investing in Real Estate vs. Banking Your Money: Why Real Estate Keeps Your Money Working For You Here’s a question you might have been asking yourself: Is it better to invest your money, or hold onto it by keeping it in the bank? There are so many old adages about...

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Lea and Lefry Amarille

Professional Real Estate Investors

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