Credit investment

Credit investment involves lending money or purchasing debt securities, such as bonds, with the expectation of receiving regular interest payments and getting the principal back at maturity. Investors analyze the borrower’s creditworthiness to assess the risk of default. These investments provide income through interest and can diversify an investment portfolio. The risk level varies depending on the borrower’s financial stability, with higher risk often offering higher returns. Overall, credit investing focuses on lending to entities—government, corporations, or other organizations—while balancing potential returns with the risk of borrower default.