undefined | Better HN

0 pointseverfree4y ago0 comments

I don't think that's clear at all, and I don't think it's helpful for you to handwave those other risks as if everybody already knows what they are. What is an example of one other risk?

The only other risk I can think of is interest rate "risk" - the "risk" that rates go up right after you buy a bond, and you'll wish that you'd waited and gotten the better deal. But I wouldn't really consider that a true risk. The bond you bought is still perfectly good, so that's just plain old buyer's remorse.

0 comments

3 comments · 1 top-level

bradwood4y ago· 2 in thread

Inflation/monetary policy risk.

Liquidity risk.

Market risk.

Geopolitical risk.

To name a few.

everfreeOP4y ago

Those are risks of the currency and risks of your personal finances, not risks of the bond not being paid back.

bradwood4y ago

My point exactly. These are risks inherent in buying/owning this financial instrument. Thus, procuring it is not without risk.

You might get your money back. But that money might be worth shit due to inflation. It might be impossible to sell the bond due to a shortage of liquidity, etc, etc.

It's naive and basically wrong to characterise a bond as zero risk just because there is an (almost) zero percent chance you won't get your money back on maturity. This is merely _one_ risk.

j / k navigate · click thread line to collapse