Historically, 10-year Malaysian government bonds reached an all-time high of 5.35 in April 2004 and an all-time low of 2.87 in January 2004. 2009. Therefore, the bond market in Malaysia is normally fluctuating, the risk taken by bondholders could be minimized by preparing homework on the bonds they will purchase with. Bonds can be a great tool 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 associated with owning corporate and/or government securities. We expose the potential risks of bonds. The first is the risk of inflation. When an investor purchases a bond, they are basically committing to receiving a rate of return, fixed or flexible, for the life of the bond or at least as long as it is held. But what if the cost of living and inflation increased dramatically and at a faster pace than investments in income? When this happens, investors will see their purchasing power erode and may actually get a negative rate of return (due to the