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My name is Bond

Started by Monoriu, July 17, 2009, 03:53:22 PM

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Jos Theelen

#45
July 18, 2009, 01:26:53 PM
Quote from: Zanza on July 18, 2009, 10:11:35 AM
So how does one "invest" intelligently if one only has a couple hundred euro per month to invest anyway? Or should I just waste it on something fun?

Put it on a savings-account and when it grows over a few thousands buy equities/bonds

Zanza

#46
July 18, 2009, 01:33:34 PM
Quote from: Admiral Yi on July 18, 2009, 12:59:52 PMWhat I would do is save the couple hundred until you have enough for a CD, then roll the CDs until you have enough to amortize the brokerage and account maintenance fees.
Right now that doesn't seem to pay off in Germany. I can get about the same interest rate (2.75%-2.85%) on a CD or on an account which I can access daily. The advantage of a CD would be to have a fixed interest rate for the duration, right? As the interest rates are extremely low right now, I don't think I'll do that right now.

Admiral Yi

#47
July 18, 2009, 01:36:56 PM
Quote from: Zanza on July 18, 2009, 01:33:34 PM
Right now that doesn't seem to pay off in Germany. I can get about the same interest rate (2.75%-2.85%) on a CD or on an account which I can access daily. The advantage of a CD would be to have a fixed interest rate for the duration, right? As the interest rates are extremely low right now, I don't think I'll do that right now.
The advantage of a CD is supposed to be higher return in exchange for reduced liquidity.  In your case it makes no sense (kind of bizarre).

Ed Anger

#48
July 18, 2009, 02:22:05 PM Last Edit: July 18, 2009, 02:23:46 PM by Ed Anger
Back in the day, I used to have a bunch of 'EE' Bonds (although I think they were just 'E' bonds back then). Sure it was low demomination, but they was backed by the gub'mint and you went to the bank to cash them in. Now I just buy them for the kids. Since now they take 20 or so years to reach their face value instead of the 9 or so back when I was a young whippersnapper.
Stay Alive...Let the Man Drive

grumbler

#49
July 19, 2009, 05:39:32 PM
Mono, I think you should put your money into high-end, limited-edition Napoleonic history books. :whistle:
The future is all around us, waiting, in moments of transition, to be born in moments of revelation. No one knows the shape of that future or where it will take us. We know only that it is always born in pain.   -G'Kar

Bayraktar!

Monoriu

#50
July 19, 2009, 08:54:20 PM
Quote from: grumbler on July 19, 2009, 05:39:32 PM
Mono, I think you should put your money into high-end, limited-edition Napoleonic history books. :whistle:

Let's just say I'm interested in financial advice from...neutral sources only  ;)

grumbler

#51
July 19, 2009, 09:28:41 PM
Quote from: Monoriu on July 19, 2009, 08:54:20 PM
Let's just say I'm interested in financial advice from...neutral sources only  ;)
Sure hope you are looking someplace other than Languish, then!  :P
The future is all around us, waiting, in moments of transition, to be born in moments of revelation. No one knows the shape of that future or where it will take us. We know only that it is always born in pain.   -G'Kar

Bayraktar!

Monoriu

#52
July 19, 2009, 10:10:10 PM
Quote from: grumbler on July 19, 2009, 09:28:41 PM
Quote from: Monoriu on July 19, 2009, 08:54:20 PM
Let's just say I'm interested in financial advice from...neutral sources only  ;)
Sure hope you are looking someplace other than Languish, then!  :P

Actually, as a source of financial advice, languish is far better than someone from my bank.  Languish is useless at worst.  But my bank wants to cheat all my money for themselves  :mad:

Ancient Demon

#53
July 19, 2009, 10:27:52 PM
Forget bonds, now's the time to get back into equity.
Ancient Demon, formerly known as Zagys.

Monoriu

#54
July 20, 2009, 02:30:43 AM
Quote from: Ancient Demon on July 19, 2009, 10:27:52 PM
Forget bonds, now's the time to get back into equity.

I don't think this should be all or nothing.  It is usually a good idea to have some bonds, some cash and some equity.  The real question is how much of each. 

Jos Theelen

#55
July 20, 2009, 03:38:44 AM
Quote from: Monoriu on July 20, 2009, 02:30:43 AMIt is usually a good idea to have some bonds, some cash and some equity.  The real question is how much of each.

The question is the maximum loss you can handle. On average high risk things like equities give a higher yield. So that would mean putting everything in equities. However when you don't want to risk a lot of money, you have to put less in equities and more in bonds and cash.

So estimate how much equities can lose in one year. Think about the maximum loss you can handle. Use that to calculate the percentage you should put in equities.

MadImmortalMan

#56
July 20, 2009, 11:41:09 AM
Quote from: Martinus on July 18, 2009, 07:49:55 AM
To hijack this thread a bit, what is the best way of managing your investments, when you do not like risk and do not want to spend time following ups and downs of world markets? So far I have been keeping all my money in interest bearing deposits, but thinking of diversifying it a bit. Thoughts?


You're not that old. Now is the time to be risking. Get some bigger gaining equities into the mix.
"Stability is destabilizing." --Hyman Minsky

"Complacency can be a self-denying prophecy."
"We have nothing to fear but lack of fear itself." --Larry Summers

Admiral Yi

#57
July 20, 2009, 12:58:08 PM
The old rule of thumb is your the percentage of your portfolio in bonds should equal your age.

The Minsky Moment

#58
July 20, 2009, 03:59:34 PM
Quote from: Admiral Yi on July 17, 2009, 03:56:37 PM
I've read a lot of stuff that says US corporate bonds (6ish) are one of the best deals going right now.  Don't know about Euro sovereign bonds.  I also read that Joanskie's much-touted TRIPS are yielding a pathetic 1.79.

Problem with coporate bonds is that many of them are callable, so unless you are skilled at calculating the underlying option value of the call, it is difficult for a lay investor to price out risk-return properly. 

Re TIPS - the current yield is not a critical figure; they are designed as a hedge against future inflation, should it materialize.
The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.
--Joan Robinson

Admiral Yi

#59
July 20, 2009, 04:08:37 PM
Quote from: The Minsky Moment on July 20, 2009, 03:59:34 PM
Problem with coporate bonds is that many of them are callable, so unless you are skilled at calculating the underlying option value of the call, it is difficult for a lay investor to price out risk-return properly. 
Does that mean that the issuer can pay off the principal at any time?

QuoteRe TIPS - the current yield is not a critical figure; they are designed as a hedge against future inflation, should it materialize.
I understand that.  I wanted to point how much that inflation hedge costs in terms of foregone yield.
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