How to Buy Canadian Government Bonds
Canadian government bonds
are worth investing in, mainly because of their market stability and fiscal security which makes them a low-risk investment instrument
that, given adequate leverage, could yield continuously-flowing dividends in the long run. Below are the steps a budding investor should take in order to purchase Canadian government bonds.
Before shopping around for foreign government securities, you should get equipped with adequate and up-to-date information about current bond prices, interest rates and yields. Also, you should garnish some funds to put in the deal and a reliable broker
to place orders on your behalf. Buying Canadian government bonds is not the same as picking a carton of milk off the shelf in the supermarket; so, make sure you know what you are doing before plunging into this initiative.
Step 1 – Do Market Research
You have to put time and effort in browsing through the different types of Canadian government bonds available on the market. Roughly, Canadian state securities fall into three main categories: bonds issued by the federal government, bonds issued by the provincial governments and, finally, such issued by the local municipalities.
Step 2 – Assess Your Financial Situation
Truly, it is quite important to make educated decisions when buying Canadian government bonds. However, you need to make sure you understand your financial situation
and know what your particular goals and objectives are. Because buying Canadian government bonds involves some level of risk, you must make sure that it is not higher than your own risk-tolerance. If you aren’t ready to take moderate risk, it is better to refrain from investing in government securities (of whatever type). You may think of switching to some more secure investment instruments like gold stocks
and silver stocks
, for example.
Step 3 – Look at Long Term Trends
Before pouring your hard-earned cash in this endeavour, you should take your time to get acquainted with the trends in the Canadian government bond market over the past ten years or so. This research will help you calculate your potential return on investment and the risk you will take. In this line of thought, you should invest only as much money as you can afford to comfortably lose, if things take a bad turn.
Step 4 – Contact Market Research Agency
Select your sources of information carefully. Independent market research agencies can provide you with unbiased quotes on prices, yields, and bond ratings and thus help you make up your mind on which type of government bonds will work best for you.
Step 5 – Talk to Your Broker
Finally, you should get in touch with your broker and ask him to assess the risks and potential dividends that such an investing initiative might involve. It is the broker’s job to navigate your financial boat through the investment ocean. As soon as you make up your mind which government bonds you should buy, do not hesitate to inform your investment advisor about your decision and ask him or her to place the purchasing orders for you.