/will you get rich buying bonds?

Arn Kacer
3 min readApr 3, 2020

Why not? The interests are constant. Bonds are often recommended for conservative investors, so you should be safe with your money. The money they pay you back is set in advance.

The truth is you can.

So how to do that? There is a fast way and a slow way.

Maybe you remember your grandmother talking about saving part of your money every month. Then putting it in a bank and watching the money grow.

If this feels like moving a mountain of rice grain by grain, it is. You move huge amount of grains and still it feels like you did nothing and had a lot in front of you.

Yes, many investment gurus advice you that getting rich is about time. With interests and compounding you make most money in the last few years. The deal is that using low interests, it takes a lot lot lot of time.

Also, money loses value over time. So even if you start with $1000, and next year you have say $1015, it may not be a win. As the coffee might now cost $4.20 instead of $4 year ago, you actually buy less coffee with these $1015.

So are all interests low?

Good question. Actually, with bonds, there are several classes of bonds. The government bonds, the municipal bonds, mortage debt, the high grade corporate bonds, and the junk bonds.

Usually the US government and some other government bonds are safe. And these also return very little interest — up to 1% right now. In Europe, some government bond interests are even negative right now.

Not all government bonds are equal, there are governments notorious in bad financial policies and those offer really high interest. These are often governments of the emerging market countries.

These governments have cases in history of not paying the money back (“defaulting”) or dropping the currency exchange rates. Be careful about the currency of a bond. If the bond is issued in a foreign currency, they may pay you back a really good interest, but the the exchange rate may be different once you get your money back. With a really nice interests payed back and drastically changed exchange rate, you might end up with the same dollar value you started with, or only slightly more, or even much less.

Municipal bonds of US cities often offer a reasonable risk with slightly better returns.

Mortage bonds had their own crisis a couple of years ago. I am sure, you can remember.

Now, if you really want to make money and can handle the risk of loosing it all, the high yield junk bonds might be for you. These are bonds of companies that often got into some trouble, or are not trusted much by the market. They might offer nice returns. And very often not pay back. If you do a good research, and really believe this company will do well till the maturity of your bond, you migh make nice money. What is good, you know how much you will make, no matter whether the market is up or down. If the company survives in a good financial health, you get your money.

To wrap this up, for us, trying to grow our finances, bonds of emerging markets and high yield junk bonds might be an answer. But it is only for those with thick skin. Most non-professionals trying out this approach without serious background and training will more probably get broke than rich.

In my opinion about getting rich with bonds— the fast way will probably leave you broke. The slow way will probably leave you dead before you see your fortune.

In getting rich, time is your enemy.

In bullandbearlist.com we build tools for regular people to search for such high potential companies. Please note that all investments entail risk and these are just my opinions, not a professional financial advice. I am not a professional financial advisor.