I've just realized that many people still confuse bonds and stocks. Today I want to share what bond money is and why it is a great choice for those who want safe investments.

It's simple, bonds are a type of debt security. When you buy a bond, you are lending money to a company or the government. In return, they will pay you periodic interest and return the principal at maturity. In other words, you become their creditor.

In Vietnam, the corporate bond market has grown an average of 35% per year from 2016 to 2020. This figure shows that this sector is developing strongly. But why is bond money "forgotten" compared to stocks? Maybe because it’s less sexy, but that is also its advantage.

There are 3 main characteristics of bonds you need to know: first, they have a specific term and fixed interest rate; second, they can be issued in various forms; third, they generate income but with lower risk than stocks.

In practice, there are 2 common types of bonds: government bonds and corporate bonds. Government bonds are very safe because issued by the State, with fixed interest rates, but lower yields. Corporate bonds offer higher yields but slightly higher risks. The maturity of corporate bonds is usually 1-3 years, while government bonds can last from 5 to 30 years.

Now, an important question: should you invest in bonds or stocks? If you prefer safety and stability, bonds are a good choice. If you want higher profits and can tolerate risk, stocks are more suitable. What is bond money if not a way for you to invest part of your capital safely?

To buy bonds in Vietnam, you just need to open an account with securities companies like VPS, MBS, Vndirect, or SSI. There are 2 ways to invest: directly or through funds. Direct investment requires a larger capital (about 100 million VND), but investing through funds only needs from 5-10 million VND. Opening an account takes just a few minutes.

When choosing bonds, prioritize reputable organizations like the Government, Banks, or large enterprises. For corporate bonds, select leading companies with competitive advantages, transparent financial health, and audited by major auditing firms. Large banks like Techcombank, Vietinbank, Vietcombank, HDbank all issue bonds with high safety.

Important terms you need to understand: Coupon is the interest rate the organization commits to pay; Face value is usually 100,000 VND or 1 million VND; Maturity date is when you receive back the principal. Additionally, there is NAV (Net Asset Value) if investing through funds.

There are 3 main risks to watch out for: credit risk (the organization cannot pay), early repayment risk (paid earlier than expected), and interest rate risk (interest rates change). However, these risks are generally smaller than those of stocks.

Overall, what is bond money if not a safe investment tool suitable for those who want steady cash flow? If you are a new investor or have idle capital, consider bonds. They do not promise quick profits, but will help you build a balanced investment portfolio. Wishing you successful investing!