Best BTPs to buy: which government bonds should you invest in?

 Talking about the best BTPs to buy (Multi-year Treasury Bills) means talking about medium and long-term bonds (they can even exceed 10 years), with a fixed payment (i.e. a coupon), which is paid every six months to all holders.

If you are a beginner and intend to identify the most convenient BTP , i.e. with the highest net yield, it is good that you know every single aspect closely and in detail, to be able to identify the solution that best suits your needs.

Contrary to popular belief, even the best BTPs to buy show their risk, which you must always keep in mind in your activities. Let's see what they are, presenting some of the most analyzed and interesting BTPs of recent times.

We will also discover how to buy BTPs , as well as the main investment alternatives, including specific ETFs on BTPs, i.e. managed funds that invest in government bonds - instruments that you can identify independently on the best online trading platforms.

Best BTPs to buy in 2022

Before proceeding with the vision of the best BTPs to buy , let's open a small targeted study on what these products are, where they come from and which category of state assets they refer to.

Each State, to pay its public expenses, uses a specific percentage of proceeds from the sale of government bonds (Government Bonds). The same can be purchased by savers, so as to obtain a possible return on investment.

Among the different types of government bonds (including BOTs, i.e. Treasury Bills , and CTZs, i.e. Zero-coupon Treasury Certificates ), we also find BTPs , whose coupon value that is detached is already known previously , that is, before the purchase.

Going in search of the best BTPs to buy in 2022 means selecting the BTPs with the highest coupon rate. Let's suppose you have purchased a BTP at 1,000 euros, with a rate of 1.30%. The coupon will be 13.00 euros every 6 months (excluding taxation).

Best BTPs to buy with the highest coupon today

BTP with higher coupon	Badger	Deadline
IT0000366721	4.25	22/12/2023
IT0000366655	4.50	11/11/2023
IT0001174611	3.25	01/11/2027
IT0001086567	3,625	01/11/2026
IT0001444378	3.00	01/05/2031

The table above immediately shows some of the best BTPs to buy in 2022 and with the highest coupons (or rather the coupon rates) on the market. However, remember that a high coupon rate does not always correspond to a good BTP.

Other factors that must be taken into account are above all the duration and therefore the yield to maturity. Aspects that we will in any case have the opportunity to deepen below, talking about BTPs with longer maturities, even beyond 10 years.

Best BTPs to buy in the long term (long term)

Long-term BTPs	Badger	Deadline
IT0005441883	1.075	01/03/2072
IT0005425233	0.85	01/09/2051
IT0005217390	1.40	01/03/2067
IT0005436701	0.075	15/05/2051
IT0005398406	1,225	01/09/2050

The list above highlights some of the best BTPs to buy in the long term , which can be associated with drawer strategies (of purchase and subsequent storage). The maturity can even exceed 40 years, an aspect that makes these instruments an asset that young people look at.

The purchase of long-term BTPs can be imagined a bit like the purchase of dividend shares , which can be kept for years in the portfolio (albeit with very different risks) and which allow to obtain periodic coupons on a semi-annual or annual basis. .

Obviously, the cases shown are part of the very long-term category (therefore ask yourself, based on your age, whether or not the proposed return is worth the use of capital for the purchase). However, there are intermediate cases , which we will indicate below.

Best 10-year BTPs to buy

10-year BTPs	Badger	Deadline
IT0005422891	0.45	01/04/2031
IT0005466013	0.475	11/06/2032
IT0005494239	1.25	01/12/2032

In the table just shown you can identify 3 BTPs with a 10-year maturity , which will therefore cease their listing in 2031/2032. Contrary to very long-term BTPs, 10-year BTPs manage to obtain interest from several investors.

It is obviously important to know how to choose the right BTP . As can be seen, despite the expected returns not being among the highest on the market (especially when compared with other assets mentioned above), considering the period, they remain among the most sought after.

Best 5-year BTPs to buy

BTPs with a 5-year maturity	Badger	Deadline
IT0001174611	3.25	01/11/2027
IT0005170839	0.80	11/06/2026

5 - year BTPs are also an excellent compromise between profitability (i.e. possible yield) and maturity, which is half the amount of the BTPs described above. In this case, the coupon rates could be higher and lower than for an extended maturity purchase.

In any case, what you must consider is always your interest on the capital used and, therefore, whether or not you intend to use the funds after a few years, or whether to make them available for this type of bond for longer (obviously always considering the risks).

Best BTPs to buy in the short term (short term)

Short-term BTPs	Badger	Deadline
IT0000366655	4.50	01/11/2023
IT0004356843	2,375	01/08/2023

We close the ranking with the best potential BTPs to buy in the short term , that is, which will cease their listing within the next few months, or in any case before 2024. At this point an important clarification is necessary.

Before proceeding with any strategy, carefully consider the expected return level, obviously keeping away from all bonds with negative yields, or not very convenient (given the short term). This would mean getting only 3/4 coupons.

How to choose the best BTPs to buy

At this point, let's try to understand how to select the best BTPs to buy . Here are some points that you can take into consideration, but always remember that past returns do not represent certainties for future returns:

• the presence of a return that balances at risk : if, for example, you have an interest in buying BTPs with maturities over 10 years, carefully assess whether the rate is suitable for such an extended period of capital "immobilization";
• the purchase price is not too high : in this case we hear very often about the so-called BTPs below 100, that is, with a unit price of less than 100 euros (like most of the products presented in our guide);
• the presence of any guarantees from a secure, historical entity with years of experience in the sector: in this case only operators with a rating of A, or even higher, are considered, so as to proceed with greater safety.

Obviously, 100% safe investments do not exist and it is always advisable to consider (given the presence of a real price) the component of unpredictability, albeit very different from other instruments, such as securities or cryptocurrencies.

How and where to buy BTP

Let's move on to the practical aspect immediately, remembering that to buy BTPs you can rely on your bank, as well as on professional platforms that provide the BTP section (which belongs to a specific segment of the Italian Stock Exchange).

More specifically, the market that makes the exchange of bonds (or similar products available) is the MOT (acronym for Mercato Telematico delle Obbligazioni ). A fundamental requirement to be able to access BTPs is therefore to have an access channel.

At this point, even conveniently online thanks to the development of high-performance Internet Banking systems, you have two options :

1. the purchase of BTPs upon their issue - if for example you happen to hear about the "placement of new government bonds", then new BTPs could soon be offered for the first time, at their initial rate;
2. the purchase of BTPs on the secondary market , i.e. instruments that were issued at a past date, but which were subsequently put up for sale on the MOT by one or more previous buyers.

The risks of investing in BTPs

Like any other investment product, even the best BTPs to buy have their own degree of risk, which you must always consider when trading on the market or of a speculative nature.

Despite this, given the presence of the State, BTPs are usually instruments with a very low risk (when compared with equities or cryptocurrencies, considered among the most volatile assets on the market).

Below is a list with the main risks associated with investing in BTPs:

• the best known risk is certainly that of insolvency, which is nevertheless taken into account more in very long-term BTPs;
• deferred repayment , which is an aspect that must always be taken into account when investments are made in this type of instrument;
• the reduction of the coupon over the years (remember that it is almost always possible to sell BTPs on the MOT after having purchased them, even during their initial placement).
• the default of the Italian state , which is raging in a situation that is certainly more drastic than other European nations, but which is nevertheless among the most solid and developed in the EU area.

When will the next BTP issue take place?

BPTs are issued periodically based on government and state decisions. Staying continuously updated on new issues allows you to know in advance when a specific new location will be launched on the market.

This allows you to be among the first to buy the BTP (through the first type of purchase that we have previously indicated) and to carefully evaluate the convenience or otherwise of the unit cost (if for example below 100), as well as the rate of coupon yield.

BTPs belonging to the type of ordinary products are allocated with an amount already defined at the outset. On the other hand, BTP Italia are sold to the public on the basis of the demand that is created on the market.

To stay updated on the next BTP issue you can:

• follow traditional economic channels and professional information sites (we too have always been a concrete point of reference for the display of daily news on the financial world);
• accurately follow the MEF calendar , which is always updated moment by moment.

Best BTPs to buy: alternatives

Let's now review the main alternatives to investing in BTPs , i.e. additional products (always available on the public market), but with different characteristics compared to government bonds.

More in detail there are:

• actively managed bond funds , which have in recent times acquired more and more interest on the market, as they are considered by investors with greater control (compared to passively managed ones);
• Government bond ETFs , i.e. funds (find out here what ETFs are ) that buy bonds from different states, structuring a very diversified basket of assets (the shares are then put up for sale on the regulated market, allowing you to become the owner of a small percentage of the bonds integrated into the fund);
• Balanced ETFs , which in addition to bonds, also invest in other assets in a balanced way (almost always equities). A product that can therefore be considered with greater risk than pure ETFs on bonds, but with a potential higher return.

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Is it worth buying Italian government bonds?

At the end of our in-depth analysis, you may wonder if investing in BTPs is worthwhile or not. The current moment is undoubtedly delicate, with a pandemic still in progress and with numerous global tensions.

All this led to an increase in inflation, a gross domestic product that fell compared to the estimates at the beginning of the year and many other economic and financial elements in imbalance. For their part, BTPs can always be considered as potentially profitable alternatives with limited risks.

You can therefore remember that:

1. long-term BTP investments are those that allow you to obtain a potentially higher coupon, considering however a higher risk;
2. investments in short and medium-term BTPs , on the other hand, offer very low coupon rates (carefully consider whether the yield allows you to at least balance inflation, given the short period);
3. careful diversification always allows you to dilute the capital across multiple products, without risking to focus resources on a single asset. You can then consider the alternative systems outlined above, including investing in ETFs .

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