Bond investment is a kind of venture investment, which is made by investors through purchasing various bonds. The main forms of risk are dispersible risk and non-dispersible risk. Investors must fully understand all kinds of risks, and take various ways to avoid risks, and strive to achieve the highest return on investment at a certain risk level.

Keywords bond investment risk prevention

Bond investment is an important part of securities investment, which is made by investors through purchasing various bonds. Generally speaking, bonds are divided into government bonds, financial bonds and corporate bonds according to different issuers. The risk of bond investment refers to the possibility and scope of the change of bond expected income, and the risk of bond investment is universal. All risks related to bond investment are called total risks, which can be divided into dispersible risks and non-dispersible risks.

1 manifestations of bond investment risk

1. 1 Non-dispersible risk

Indispensable risk, also known as systemic risk, refers to the possibility that all bonds in the market will suffer economic losses due to certain factors, including policy risk, tax risk, interest rate risk and inflation risk.

1. 1. 1 policy risk

Policy risk refers to the risk that the government's policy on the bond market has undergone major changes or important measures and regulations have been introduced, which has caused bond price fluctuations and thus brought to investors. The government usually has certain plans and policies for the development of the domestic bond market to guide the development of the market and strengthen the management of the market. The government's planning and policies for the development of the bond market should be long-term and stable. On the premise of established planning and policies, the government should use legal means, economic means and necessary administrative means to guide the healthy and orderly development of the bond market.

1. 1.2 tax risk

Investors who invest in tax-free government bonds face the risk of lower tax rates. The higher the tax rate, the greater the value of tax exemption. If the tax rate is reduced, the real value of tax exemption will be reduced accordingly, and the bond price will fall. Investors who invest in tax-exempt bonds may face the situation that the relevant tax collection and management authorities cancel the tax exemption of the bonds they buy, which may also cause income losses.

1. 1.3 interest rate risk

Interest rate risk refers to the possibility of income loss to investors due to possible changes in market interest rates. Bonds are legal contracts, and the coupon rate of most bonds is fixed. When the market interest rate rises, it will attract some funds to flow to other financial assets such as bank deposits, reduce the demand for bonds, and the bond price will fall; When the market interest rate drops, some funds will flow back to the bond market, increasing the demand for bonds, and bond prices will rise. At the same time, the longer the maturity of bonds purchased by investors, the greater the possibility of interest rate changes and the greater the interest rate risk.

1. 1.4 inflation risk

Because the real yield of investment bonds = nominal yield-inflation rate. Under the condition of inflation, with the rise of commodity prices, bond prices will also rise, and investors' monetary income will increase, which will make them ignore the existence of inflation risks and create an illusion. In fact, due to the devaluation of the currency, the purchasing power of the currency declines, and the real yield of bonds will also decline. When the real purchasing power of money declines, sometimes even if our investment income increases in quantity, what we can buy in the market is relatively reduced. When the inflation rate rises above the bond interest rate, the actual purchasing power of bonds will fall below the purchasing power of the original investment.

1.2 can spread risks.

Diversified risk, also known as system risk, refers to the possibility of economic losses caused by certain factors to a single bond, including credit risk, recovery risk, reinvestment risk, transfer risk and convertible risk.

1.2. 1 credit risk

When the bond issuer fails to repay the principal and interest when the bond expires, the risk of investors suffering losses is credit risk. This risk is mainly manifested in corporate bonds. If the company fails to repay the principal and interest in full for some reason, bond investors will suffer huge losses. Even if the company is in very good operating condition, we can't rule out the possibility that it is in poor financial condition. If this happens, the company's ability to repay the principal and interest will decline, and then it will not be able to repay the principal and interest as agreed, resulting in credit risk.

1.2.2 recovery risk

For bonds with recoverable clauses, there is often the possibility of compulsory recovery, and this possibility is often when the market interest rate drops and investors charge the actual increased interest according to the nominal interest rate of bonds. However, if the issuing company withdraws the bonds in advance, the investors' expected income will suffer losses, which will lead to the recovery risk.

1.2.3 reinvestment risk

Because you buy short-term bonds instead of long-term bonds, there is a risk of reinvestment. For example, the interest rate of long-term bonds is 10%, and the interest rate of short-term bonds is 8%. Buying short-term bonds is to reduce risk. However, if the interest rate falls to 6% when the short-term bonds recover cash at maturity, it is not easy to find investment opportunities higher than 6%, thus creating reinvestment risks.

1.2.4 Transfer risk

When investors are eager to transfer the bonds in their hands, they sometimes have to make some discounts on the price or pay a certain commission, and the change of income brought by this payment creates the transfer risk.

1.2.5 Convertible risk

If investors buy convertible bonds, the dividends are not fixed when they are converted into stocks. Compared with bonds, stock prices change frequently and unpredictably. After this conversion, the possibility of loss of investors' investment income will increase, resulting in convertible risks.

2 bond investment risk prevention

2. 1 Reasonably estimate the degree of risk

Before investing, investors should understand and master all kinds of information through various channels, and analyze all kinds of risks that the investment object may bring from both macro and micro aspects.

(1) From a macro perspective, it is necessary to accurately analyze the changes of various political, economic and social factors; Understand the cyclical characteristics of economic operation and the changing trends of various macroeconomic policies, especially fiscal policies and monetary policies; Pay attention to the change of bank interest rate and the change of various factors affecting interest rate.

(2) From the microscopic aspect, we should first grasp the national industrial policy as a whole, and then analyze various factors that affect the price changes of national debt or corporate debt. For investors in corporate bonds, they should fully understand the credit rating, development prospects, management level and market share of products. Among them, the company's credit rating can be completed by professional bond credit rating agencies, and the rest of the factors must rely on investors to fully grasp the relevant information in order to get more accurate risk judgment results.

2.2 Comprehensive determination of bond investment cost

Determining the investment cost of bonds also requires investors to do it before investing. The cost of bond investment can be roughly divided into three parts: purchase cost, transaction cost and tax cost.

(1) bonds are not free, and we need to exchange them at equal value to get bonds. Its purchase cost is equal to the principal of the bond in quantity, that is, the product of the number of bonds purchased and the issue price of the bond. If the transfer transaction is in the middle, it is multiplied by the transfer price. For interest-bearing bonds, the issue price is calculated by the issuer according to the expected rate of return, that is, the purchase price = the present value of face value+the present value of interest. For discounted bonds, the calculation method of purchase cost is: purchase price = face value ×( 1 year discount rate).

(2) After the bonds are issued for a period of time, they will enter the secondary market for circulation and transfer. If they trade on an exchange, they must pay a commission to their brokers. However, investors can subscribe for government bonds listed on the exchange through securities companies without paying commissions. In other cases, the commission charge standard is: when the price of each bond (one hand 10 share) rises or falls by 0.0 1 yuan, the starting price is 5 yuan. Brokers will charge transaction fees, visa fees and transfer fees when handling some specific procedures for investors.

(3) We also need to consider the tax cost. Although government bonds and financial bonds are tax-free, bond transactions are also exempt from stamp duty required for stock transactions, but when we invest in corporate bonds, we have to pay personal income adjustment tax accounting for 20% of the investment income, which will be deducted by the stock exchange when clearing our capital account after each transaction is finally completed.

2.3 Accurate calculation of bond investment income

The investment income of bonds includes interest, price difference and interest income from interest reinvestment. This is only its nominal income, that is, the nominal income of investment bonds = face value × holding years × annual interest rate of bonds+spread+interest, where the spread should be negative when bonds are issued at a premium. But in fact, income is a concept of social category, and the change of price level or inflation factor must be considered comprehensively. Therefore, when calculating the actual income, we must also exclude the inflation rate or price index, that is, the actual income = nominal income/price index, so as to accurately calculate the bond investment income.

2.4 Grasp the right bond investment opportunities

The so-called timing of bond investment means that investors should combine their own actual situation, that is, the long-term amount of funds that their units or individuals can control. Generally speaking, the long-term funds that most domestic units can control are very limited, and only some temporarily idle funds can be used for bond investment. Taking short-term maturity can not only make bonds highly liquid, but also obtain higher returns than bank deposits. Due to the short term of the bonds invested, once investors need funds, they can transfer them quickly to meet the needs of production and operation. This investment method can maintain the liquidity and flexibility of funds. On the other hand, we need to pay close attention to the changes in interest rates. If the interest rate increases, the bond price will decrease, and there will be risks at this time. But if you do short-term investment, you can quickly find high-yield investment opportunities. On the other hand, if interest rates are lowered, long-term bonds can maintain high yields.

2.5 Choose diversified bond investment methods

The so-called diversification of bond investment means that investors invest their own funds in different types of bonds, such as national debt, financial debt, corporate debt and so on. The returns and risks of various bonds are different. If you concentrate your funds on a bond, it may have various adverse consequences. For example, if you spend all your money on buying government bonds, although this kind of investment behavior is very safe and the risk is very low, because the interest rate of government bonds is relatively low, investors will lose the high income they can get from investing in corporate bonds. If all the funds are invested in high-yield low-grade corporate bonds, the income may be high, but it lacks security, and it is also likely to encounter operational risks and default risks. In the end, the promise of high income may become empty talk. Diversification of investment types can achieve the purpose of dispersing risks and stabilizing returns. Second, investors spread their funds among bonds with different maturities. Investors usually hold short, medium and long-term bonds. At any time, some bonds are about to mature. When it matures, they invest their money in the longest-term securities. Suppose an investor has a capital of 200,000 yuan, and he uses 40,000 yuan to buy various bonds of 1 year, 2 years, 3 years, 4 years and 5 years respectively. In this way, he has 20,000 yuan of bonds due every year, and then buys 5-year bonds after the funds are recovered, and so on. This method is simple and easy to operate, which enables investors to use and allocate funds in a planned way.

In short, bond investment is a kind of venture capital, and investors must have a comprehensive understanding of all kinds of risks when investing, and measure them. At the same time, take various ways to avoid risks and strive to maximize the return on investment at a certain risk level.

refer to

James van horn. Modern financial management (version 10) [M]. Beijing: Economic Science Press, 1999

Bernstein, Damodaran. Investment management [M]. Beijing Machinery Industry Press 2000

3 Zhang Xianzhi. Financial analysis [M]. Dalian: Dongbei University of Finance and Economics Press, 200 1.

4 meditation. Financial management (3rd edition) [M]. Beijing: Renmin University of China Press, 2002

I hope it helps you.