Corporate Bonds vs Government Bonds

Corporate bonds and government bonds are very similar but they do have a few key differences. The performance of both of these bonds can seem very similar. During a good economy, corporate bonds are going to outperform government bonds. Whenever the economy is bad, government bonds are going to actually do better than a corporate bond. If you look at the long-term performance of each, corporate bonds are going to outperform government bonds overall.

Risk

Another area where these two types of bonds differ is in the risk that is associated with them. While they are both relatively safe forms of investment, corporate bonds are going to have a higher level of risk. Government bonds are considered to be a risk-free investment according to most experts. As long as you believe that the government is going to remain intact, your investment should be safe. With an individual company, you could choose a company that goes bankrupt. If this happens, you could potentially lose your entire principal on the investment.

Convenience

Government bonds are easier to purchase than corporate bonds. You can purchase government bonds directly from the Treasury website. With corporate bonds, you will have to work with a bond broker.

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