5 Risks of holding Government Bonds

December 28, 2022

Government bonds are normally referred to as gilt-edged securities. This has two implications. In the old days, the government securities in the US would actually come with a gold edge, which explains the name. But gilt-edged also refers to something that is totally free from risk. The general belief, and wrongly so, is that there is no risk in holding on to government bonds. The truth is that government bonds are only free from default risk. But then bonds are not just about default risk alone. The real risk of bonds lies elsewhere.  So, what are government bond risk and returns? Are there risks of investing in bonds issued by the government? Here are 5 bond investing risks of government bonds that you were probably not aware of.