A bondholder must be extremely careful while buying the bonds — companies that offer very high interest rate may some time go bankrupt and the bondholder may be left empty-handed.

Though investing one’s savings on bonds is a safe way, a bondholder may lose savings, as everyone else does, when there is a financial crisis.

‘Burning bondholders’ is a method of paying back bondholders’ money by percentage when there is a very serious global financial crisis — for instance, depending on the seriousness of  the crisis, a bondholder may be paid 90%, if the situation is better, or in worse cases, only 10% of the bond value!