Understanding Fixed Income Securities - Debashis Basu

Moneylife Foundation held an exclusive, in-depth session which delved into different regulated options for fixed income investments. Avoid unregulated schemes even if they offer lucrative returns. More money has been lost chasing higher yield. What are the warning signs? This seminar is a guide to understanding the nuances of fixed income securities.

[Harihar_Patel]

Sometimes buying fixed income securities below par can be a good strategy. For example take Eros bonds yielding 6.5% on the £100 nominal, they crashed down to £27 when there was no real problem with the company, just some poor analyst report from Wells Fargo. Now the bonds have recovered to £81, so you could have made a lot of money jumping on this falling knife. Though it is risky.

All I can say is don't buy fixed income securities above par, unless you are really getting a strong return that can't be beaten in the fixed income market ( say 9/10/11% in the UK bond market).