Earn over 20% a year from government bonds

NEW DELHI: Psst... want to earn more than 20% returns? No, not from stocks. This is a government security. Yes, you read it right. More than 20% returns from an instrument that carries a sovereign guarantee. The only catch: this is the Greek government we are talking about and there’s no telling if you will get any interest or your money back on maturity. The 10-year bond yield in Greece fell 42 basis points on Friday but still remains high at 20.55%. Just eight weeks back, on 2 March, the 10-year benchmark yield had touched an all-time high of 37.1%.

In Spain, another European economy that is on the brink of a sovereign default, government bond yields have started inching up but are still way below at 5.88%. In November, they had shot up to 6.69% but receded after the European Central Bank stepped in with a bailout package for the troubled economies.

Bond yields are also at high levels in Portugal, with the 10-year paper offering 10.48%. On Friday, yields fell by 44 basis points. A sharp spike saw the yield shooting up to 17.39% on 30 January but it soon came down.

While bonds of these European countries are going abegging, in Japan, the yield is below 1%. If you invest 1,00,000 yen in Japanese government bonds today, your money will earn 897 yen in a year. This is still better than Switzerland, where a yield of 0.726% means 1,00,000 Swiss francs will earn a piddly 726 francs in a year. Makes you wonder why so many Indians park their money in that country.