Historically, the 10-year Malaysian government bond reached an all-time high of 5.35 in April 2004 and a record low of 2.87 in January 2009. Thus, the bond market in Malaysia is fluctuating normally, the risk taken by the bond holders could be minimized by preparing duties on the bonds with which they are going to purchase. Bonds can be an excellent instrument for generating income and are widely considered a safe investment, especially compared to equity securities such as stocks. However, investors should be aware of some potential pitfalls and risks of owning corporate and/or government bonds. Let’s outline the potential risks of bonds. The first is the risk of inflation. When an investor buys a bond, they are crucially agreeing to receive a rate of return, fixed or flexible, for the life of the bond or at least as long as it is held. But what happens if the cost of living and inflation rise dramatically, and at a faster rate than investment income? When this happens, investors will see their purchasing power deteriorate and may even earn a negative rate of return (due to taking into account