How To Buy Foreign Government Bonds

Currency review

People are always finding ways to invest their money in profitable ventures. Some put up a little business of their own while others focus their sights on investment firms. One sure way of ensuring your revenues is by buying foreign government bonds. The best time to invest in these bonds is during times when the economy is slacking and the value of the U.S. dollar is weak. Buying foreign government bonds is deemed to shield investors from the deteriorating state of the dollar, although there are some hazards involved such as the threat of a global economic slide. Nonetheless, any business undertaking is a gamble and buying foreign government bonds is not free from the risks involved. Here are some tips that may help you when buying foreign government bonds:

  1. Make up your mind up on the amount you will invest. The average number of minimum units you are allowed to purchase is 10,000 on the face value. This value however may be reduced to below 10,000 dollars in order to accommodate shareholders with less purchasing capacity. Now if you think you can afford to buy more than the minimum number of units, you may do so. However for first timers, it is wise to feel the pulse of the industry first before venturing for higher stakes.
  2. Do a research on the different kinds of foreign government bonds. This will help you decide whether to place your stake on local or federal government bonds.
  3. Learn about the movements of foreign government bonds. It will also be helpful if you get a background on the political and economic status of a country where you wish to buy bonds so you know if there are possible risks for your prospective investment. Make sure the country you are investing in has a stable government. A country with no political security will most likely suffer from economic setbacks. Foreign bonds are not guaranteed by the American government, so in case of a bond crash, there is no way for you to recover your outlay.
  4. Avoid paying high commissions to brokers by making a direct deal with the government of the country where you are making your purchase. Although not many countries sell their bonds directly to the community, there are some that allow direct transactions with investors.
  5. Choose a reputable broker to buy the bonds on your behalf. Beware however of giant brokerage companies if you intend to put your money in the world market. Usually, large companies will recommend more investment options, which might cause you to deviate from the primary objective of your purchase.
  6. Select a website that offers bond sale and purchase services. Make sure the website allows purchases using the U.S. dollar so there’s no need for you to open a foreign account.
  7. When buying bonds online, seek the assistance of an online broker. Take caution though, because online transactions are not done face to face and therefore you only see the progress of your investment on the web. Certificates of purchase may be emailed or sent in hard copies through postal mail. Whichever the case, make sure the certificates are authentic and foolproof.

Buying foreign government bonds, much like any other type of investment, has both its perks and risks. Hence you need to exercise extra care in dealing with the people involved in the purchase so you won’t be a victim of shameless scams.


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