QUESTION: Bonds: how do OFZs differ from corporate bonds?

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Accepted Answer

The difference between federal loan bonds (OFZs) and corporate securities lies in reliability, yield, and investment goals. Government bonds are issued by the Ministry of Finance and are considered the risk-free instrument in the Russian market, as the state guarantees the return of funds through its reserves and tax revenues. Corporate bonds are issued by commercial companies, so their yield is usually higher, but the investor assumes the increased business risk of the issuer.

To properly form a portfolio from these instruments and account for all key factors, it is recommended to follow a proven scheme.

1. Determine your current starting point and investment profile by assessing the acceptable risk level and available capital.

2. Set a success metric, such as a desired portfolio yield higher than the inflation rate or a bank deposit.

3. Choose instruments by combining reliable OFZs for stability and corporate bonds of reliable issuers for yield growth.

4. Set a deadline and investment horizon, taking into account the maturity date of the selected bond issues.

5. Automate regular actions by setting up automatic replenishment of the brokerage account and monthly asset purchases.

Applying this algorithm allows you to balance the conservative and yield parts of the portfolio, protect savings from inflation, and receive regular coupon income.

QUESTION: Bonds: how do OFZs differ from corporate bonds?

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