Investing in Bonds

[lukegriffen]

Hi, I'm thinking of investing in bonds,eg. something like Quinn Life Euro Bonds Freeway, as it seems a safe option & I don't want to lose my initial investment, but am hoping to get a better rate than a deposit a/c, and it has risen 5% in last 3 months.
Would someone be able to tell me what might cause Bonds to lose value ?
When I googled, all I found was that when interest rates are high, then returns on bonds are low.

And I'd be interested in hearing opinions on whether it's worthwhile investing in the short term.

Thanks in advance for any replies

 

[george.shaw]

Government bonds are very overvalued, possibly a bubble and likely not a safe haven.

Probably better and safer to focus on Rabo deposits and physical gold bullion.

James Grant is acknowledged as one of the world’s leading experts on government bonds and might pay to heed his warning:

The Problem With the Federal Reserve's Money-Printing - Is the Medicine Worse Than the Illness?
http://online.wsj.com/article/SB122973431525523215.html?mod=todays_us_weekend_jo urnal
The world ran out of trust in 2008 -- but there is no shortage of money because the Fed is printing like mad. It's the wrong approach, with potentially dire consequences, says James Grant.

Ambrose Pritchard in the Daily Telegraph has been ahead of the curve as well:
The Bond Bubble is an Accident Waiting to Happen
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/4218210/The-bond-bubble-has-long-since-burst-investors-ignore-this-at-you-peril.html

 

[soy]

I looked at bonds a couple of years ago as part of a diversification strategy. Cannot remember the details but they were not really suitable for the individual investor dealing. Think the main problem was tax treatment of what were already low yields. I decided a deposit account would be a better and simpler option.

 

[Brendan Burgess]

Soy

Investing directly in bonds is not efficient for personal tax purposes as they are taxed at one's marginal rate - up to 46.5% now.

But you can invest in bonds through a Unit Linked fund as the OP asked and you would be taxed at the exit tax rate.

Brendan