Volume 13, Number 2, December 2023
| Fixed-Income Securities in Portfolios: Comparative Analysis of Corporate Bonds and Bank Deposits |
Deng-Hui Chen 1, Jui-Cheng Hung 2, Fu-Ming Lai 3, Yi-Hsien Wang 3*
Abstract
In the post-pandemic era, lifestyle changes and the return to high-interest rates reminiscent of the pre-financial crisis period have reshaped the financial landscape, prompting individuals to rethink traditional money management strategies. Fixed deposits were a popular choice for their dual role as an investment and a financial safety net. However, the prolonged low-interest rate environment before the pandemic highlighted the need for more effective financial strategies to counter economic stagnation. This study focuses on comparing Taiwan bank fixed deposits and overseas investment-grade bonds, particularly in scenarios where funds are idle and not needed for short-term use. By analyzing returns and payback periods under the assumption of a stable exchange rate of 1:30 USD to TWD and considering the current trend toward lower interest rates, this research aims to determine whether investment-grade bonds offer a more advantageous option. Ultimately, the study seeks to provide practical insights and guidance for individuals exploring entry-level investment opportunities.
Keywords: Taiwan Dollar Fixed Deposit, Investment Grade Bonds, Consumer Price Index, Returns
JEL Classification: G11, E31, E43
1 Master Program of Business Administration in Practicing, Chinese Culture University,Taipei,Taiwan
2 Department of Banking & Finance, Chinese Culture University Taipei,Taiwan
3 Doctorate Program in Intelligent Banking and Finance, CTBC Business School, Tainan, Taiwan.
* ( E-mail: wang12@ctbc.edu.tw)