The main purpose of the essay was to evaluate whether investments in index-linked bonds were suitable investments for smaller investors on the international finance market. To determine whether the index-linked bonds are good investments, the variables yield, cost and risk were used to measure the index-linked bonds against investments in stocks and funds. The reason for the interest in this subject is that investments in index-linked bonds have grown furiously the last few years. With the growth of the investments the criticism of index-linked bonds has also grown stronger. The critics’ main point is the cost of the product, and they imply that investors can create their own index-linked bond and thereby avoid the bank fees.This study used a quantitative approach, because all the data of yield, cost and risk consist of numbers. The method used is the abductive method, which means that the examination has the starting point in the results which is linked to a theory.Data has been gathered concerning the index-linked bonds from the four biggest banks in Sweden; Nordea, SEB, Handelsbanken and Swedbank. The variables used are yield and cost. The results have been compared with the results of funds and indices on a related market to measure the performance of the index-linked bonds. These results have been analysed to evaluate and to conclude whether the index-linked bonds are good investments or not.The results from the examination showed that the index-linked bonds gave a higher average yield than both stocks and funds. This is to some extent explained by the limited risk of loss the investor faces with index-linked bonds, as an effect of the capital protection that the index-linked bond provides. On an upturning market however, the results show that stocks and funds in a majority of these cases gave higher yields than the index-linked bonds. The result of the cost comparison shows that there is not too much of a difference. The biggest difference is that the cost of the funds depend on how the fun...
