What are government bonds? | IG Explainers

Learn all about government bonds: including what they are, how they work, and why they move in price with IGTV's Sara Walker.


#governmentbonds #bonds #finance

We provide fast and flexible access to over 10,000 financial markets – including indices, shares, forex, commodities – through our award-winning range of platforms and apps.

Established in 1974 as the world’s first financial spread betting firm, we’re now the world’s No.1 provider of CFDs and spread betting* and a global leader in forex. We also offer an execution-only share dealing service in the UK, Ireland, Germany, Austria and the Netherlands. Through our low fees and smart price-sourcing technology, we help traders keep their costs down.

All trading involves risk. Spread bets and CFDs are leveraged products and can result in losses that exceed deposits. The value of shares, ETFs and ETCs bought through a share dealing account can fall as well as rise. Please take care to manage your exposure.

* For CFDs, based on revenue excluding FX, published financial statements, October 2016; number of active UK financial spread betting accounts (Investment Trends UK Leveraged Trading Report released June 2017); for forex based on number of primary relationships with FX traders (Investment Trends UK Leveraged Trading Report released June 2017)

[MarkMach]

The explanation could be more in depth explaining the relationship between bond price and it's yeild.

[aestaeggukie]

I have economics exams tomorrow. This has better enhance my understanding. Thanks!!

[timtam]

This has made more sense to me since Covid-19.

[mousehead]

And where are they getting the money to pay this interest? Taxation?

[prithviraj]

Low demand-high Interest
High demand- low interest

[RobCLynch]

I've been investing into global index trackers since 2005 and found that my money doubles every 6-7 years - despite the financial crash of 2008 and the pandemic sell-off.
I'm looking at bonds as an additional investment, but knowing what I can get from the markets makes me feel like I'm wasting my money.

[nokubongasinikeziwe]

Please explain to me, how can I start with this investments do I download app?

[art_njeri]

i don't understand how the interest rises from 5% to 5.6% yet the buyer still gets 50 pounds per year so no interest increment is seen here. ama the extra 0.6 on the 5% interest is for the extra 100 pounds the buyer who bought the bonds at 900 pounds in the open market instead of the original 1000 pounds price??

[loaded]

That was great thank you! More videos like that would be awesome please :)

[Whispering_death]

Can a person ask for his/her money back before the bond is expired????

[anthonyrebock]

No Compound interest and double your many in TEN YEARS ??...(invest in rabbits) they MULTIPLY faster than lambs ewes and goats.

[widit]

Can someone in the comment section tell me how I can do this plz

[CuriousGorillaIq]

Gov needs that money from us to payback it’s older debts from the investment. Quite the scheme

[ImperialMoves]

If I invest in a US Government 3 MO yield. Would I be able to sell those bonds whenever I want??

[mrmatias]

Thanks. Indeed, that was the best explanation I ever heard about " GOVERNMENT BONDS ". Please, borrow money to local bank with interest rate is it the same buying Government Bonds with interest rate? Are they the same thing?

[Grizzlyx]

damn i will go ahead and close it now. didnt understand shit

[therealnoodles]

very misleading. That's not how it works in the real world. Bonds are a reserve drain function for the government. They also serve as risk free assets for fund portfolios. They only really exist because the private sector would like to hold them and the governemnt wants to get rid of excess banking reserves in the system, because it has a target to maintain. Otherwise if it didn't, the interest rate would deviate away from their official interest rate target.

[MelonCapital]

Government bonds are a mess negative real yields I wish you could get 5%

[luisomarperez]

And then tax payers pay the interest cause is all a scam 😭

[laqueefasteinberg]

"5% coupon" ahahahaha good luck getting even a tenth of that after the gvnt pandemic measures lowered interest rates to near zero. Same with pensions, savings, etc.