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Before you can buy bonds

As bonds aren’t like most other investments, there are a few things you need to know and do before you can buy them. 

Understand how bonds work

Bonds are slightly different to investments like shares, so it’s important you understand how they work before you trade. 

They represent the debt of the organisation issuing them, which means you’re essentially loaning money to that particular company or government whenever you buy a bond or gilt. 

Each bond has a credit rating that indicates the predicted level of risk, which is provided by an external agency, while prices depend on demand and how much ‘accrued interest’ is due and when you buy. 

There’s much more to know about bonds, and you should be comfortable with their behaviour before you trade. Like all investments, they can fall as well as rise in value, so you could get back less than you invest.

Complete a complex investments questionnaire

Higher–risk bonds are what’s known as a ‘complex investment’, so we’ll ask you to complete a questionnaire to check you understand them before you can trade them with HL. 

The questionnaire will ask you about your previous investing knowledge, your experience with bonds, and whether you’ve traded them before. It will also check your understanding of bond behaviours and their associated risks. 

How to complete the questionnaire on the website: 
  • Log in online to see your accounts. 
  • Select the Account settings tab. 
  • Select Share dealing and live prices from the menu list. 
  • Under Complex investments, find Bonds and Fixed Interest Investments and select ‘Take questionnaire’. 
  • Answer the questions and select ‘Confirm’ to complete. 

If you answer any questions incorrectly, you can repeat the questionnaire after having re-read the information provided on bonds.

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