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Are long term bonds always a better investment because their interest rates are higher

Are long term bonds always a better investment because their interest rates are higher

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Answer #1

Long Term Bonds are not so preferred in terms of Value they could give. See, the higher the maturity, higher will be the Risk that the value of BOnds will fluctuate more. i.e. Reinvestment Risk.

For insatance let's say you have long term bond and suddenly the interest rates in the market falls, now there is possibility that you will be re investing you coupon at a lower rate compared to the interest rate of the bond originally provided. Also they have higher defalut risk.

Long Term Bonds are comparatively more risky than the short term bond

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