Is this a good time to buy bonds? Yields on the bond funds that I've seen are about 4% now. Modest, but acceptable. The thing is inflation will kill me. And maybe equity is a better bet now.
But I can't put all money in equities and cash. I need some assets in Euros, and not everything in US$. If I'm going to buy Euros, may as well put them in bonds which offer a higher return.
I've looked at the actual bonds that the funds have. Looks like Poland is their favourite. A lot of people have bought bonds from the Government of...Iraq, of all places. Denominated in US$, of course.
Thoughts?
My CD is presently paying .86% and Bank of Amerika was like all proud of this, like the were the cats-meow. <_<
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.
Quote from: Admiral Yi on July 17, 2009, 03:56:37 PM
I also read that Joanskie's much-touted TRIPS are yielding a pathetic 1.79.
Not surprised. You can't have it both ways. If it is a good hedge against inflation, then something else has to give.
BTW, some bond funds are labelled "hedged", and they are classified as more risky. I can't figure out what they've done. Any ideas?
Quote from: Habsburg on July 17, 2009, 03:55:22 PM
My CD is presently paying .86% and Bank of Amerika was like all proud of this, like the were the cats-meow. <_<
My CD that I forgot to cancel before it renewed itself is now at 1.04% :(
Quote from: garbon on July 17, 2009, 03:59:47 PM
Quote from: Habsburg on July 17, 2009, 03:55:22 PM
My CD is presently paying .86% and Bank of Amerika was like all proud of this, like the were the cats-meow. <_<
My CD that I forgot to cancel before it renewed itself is now at 1.04% :(
In HK, fixed deposits are paying something like 0.25%.
Quote from: Monoriu on July 17, 2009, 04:01:18 PM
In HK, fixed deposits are paying something like 0.25%.
That's what my savings is paying as well...
Quote from: garbon on July 17, 2009, 04:03:03 PM
Quote from: Monoriu on July 17, 2009, 04:01:18 PM
In HK, fixed deposits are paying something like 0.25%.
That's what my savings is paying as well...
Savings is paying 0.000001%. Forgot how many zeros, but you get the idea.
Quote from: Monoriu on July 17, 2009, 04:03:45 PM
Savings is paying 0.000001%. Forgot how many zeros, but you get the idea.
Ingdirect is giving me 1.39% on savings! Huzzah! :weep:
Quote from: Monoriu on July 17, 2009, 03:59:33 PM
BTW, some bond funds are labelled "hedged", and they are classified as more risky. I can't figure out what they've done. Any ideas?
Nope. Aside from the obvious of investing in lower grade bonds.
I'm putting a fair amount of money into defensive stocks with high yields. Companies like National Grid (formerly a UK monopoly, now a private company with about 50% of it's business in the USA).
http://www.digitallook.com/companyresearch/51261/National_Grid/company_research.html
The yield is currently 6.7% and will rise (unless the share prices rise as well, but that's all good).........unless the regulated business of transmitting gas and electricity in the NE US and the UK suddenly becomes unprofitable because nobody is using power........in which case we are probably dead anyway :D
Well, that is the theory :huh:
Put me down as someone with no clue as to what to put money in that will yeild a decent return.
Right now, I'm putting large amounts into making extra payments on my mortgage.
Quote from: Malthus on July 17, 2009, 04:48:23 PM
Put me down as someone with no clue as to what to put money in that will yeild a decent return.
Right now, I'm putting large amounts into making extra payments on my mortgage.
I have no clue either. But I have to do something. I can't put all money in cash forever.
And you also have a wife who is knowledgable in these things. My wife will either say she doesn't want to think about it or will spend it all. It's me, because there is no one else :(
Quote from: Monoriu on July 17, 2009, 04:57:43 PM
Quote from: Malthus on July 17, 2009, 04:48:23 PM
Put me down as someone with no clue as to what to put money in that will yeild a decent return.
Right now, I'm putting large amounts into making extra payments on my mortgage.
I have no clue either. But I have to do something. I can't put all money in cash forever.
And you also have a wife who is knowledgable in these things. My wife will either say she doesn't want to think about it or will spend it all. It's me, because there is no one else :(
My wife saved us a considerable sum, by *not* putting it in anything for the last few years. :D
Quote from: Malthus on July 17, 2009, 05:02:18 PM
My wife saved us a considerable sum, by *not* putting it in anything for the last few years. :D
The question is will this strategy continue to work? :pullshairout:
Quote from: garbon on July 17, 2009, 03:59:47 PM
Quote from: Habsburg on July 17, 2009, 03:55:22 PM
My CD is presently paying .86% and Bank of Amerika was like all proud of this, like the were the cats-meow. <_<
My CD that I forgot to cancel before it renewed itself is now at 1.04% :(
That is just what happened to me, I forgot it was maturing 6/18 and all of a sudden on July 3rd I'm like OMG!
I go in and the lady is all like, "oh it rolled over at the present rate." I'm like, "what is the present rate"?
She leans over all proud and whispers (as if it is too good to be heard by the masses) ".86%" !!!
<_<
I really don't understand why you guys don't pay more attention to your finances, and "forget" these things. My wife is the same. She assumes that everything will be alright. Even when I warn her that she needs to check her accounts on a certain date, she refuses to do it. Mistakes and hilarity follow.
I check my accounts almost every day.
I throw pennies out.
Quote from: garbon on July 17, 2009, 05:46:17 PM
I throw pennies out.
When I was in Canada, sometimes I got US pennies. I saved them up, because they were worth more. I still have them with me.
Sounds like they've done you a lot of good.
Quote from: Monoriu on July 17, 2009, 05:45:26 PM
I really don't understand why you guys don't pay more attention to your finances, and "forget" these things. My wife is the same. She assumes that everything will be alright. Even when I warn her that she needs to check her accounts on a certain date, she refuses to do it. Mistakes and hilarity follow.
I check my accounts almost every day.
It's not as if CD rates are going to go through the roof in a couple weeks.
Quote from: Admiral Yi on July 17, 2009, 05:50:13 PM
It's not as if CD rates are going to go through the roof in a couple weeks.
But it should be a conscious decision to renew the CD or not.
Quote from: garbon on July 17, 2009, 05:49:56 PM
Sounds like they've done you a lot of good.
I'll use them next time I go to the US :)
Quote from: Monoriu on July 17, 2009, 05:52:32 PM
I'll use them next time I go to the US :)
:lol:
Yeah, like I said. ;)
Quote from: Monoriu on July 17, 2009, 05:51:43 PM
But it should be a conscious decision to renew the CD or not.
Present your argument.
Quote from: Admiral Yi on July 17, 2009, 05:53:53 PM
Quote from: Monoriu on July 17, 2009, 05:51:43 PM
But it should be a conscious decision to renew the CD or not.
Present your argument.
Failure to carefully consider your options before the CD is due may result in opportunities lost. Letting the CD automatically renew itself means one has not taken full consideration of the options available.
Quote from: Monoriu on July 17, 2009, 05:56:08 PM
Failure to carefully consider your options before the CD is due may result in opportunities lost. Letting the CD automatically renew itself means one has not taken full consideration of the options available.
There are essentially two options. You can roll it over at whatever rate, or you can park it in cash in the hopes that rates will rise enough in the short term to compensate for the lost interest on the waiting period. But unless it's a period of high rate volatility it's very possible that the time and effort you spend to arrive at a decision will not offset the gain.
It's different for you because you *enjoy* spending time and effort saving yourself pennies. But it's probably not a generalizable rule.
Quote from: Monoriu on July 17, 2009, 05:56:08 PM
Failure to carefully consider your options before the CD is due may result in opportunities lost. Letting the CD automatically renew itself means one has not taken full consideration of the options available.
You are right that I should have pulled out my money ahead of time (as it was what I'd planned to do)...however with some quick and loose math, I think I lost less than $10* when compared to my most likely other course of action. I'll be alright. :)
And that's assuming that interests rates don't continue to decline. <_<
Quote from: Admiral Yi on July 17, 2009, 06:01:39 PM
There are essentially two options. You can roll it over at whatever rate, or you can park it in cash in the hopes that rates will rise enough in the short term to compensate for the lost interest on the waiting period. But unless it's a period of high rate volatility it's very possible that the time and effort you spend to arrive at a decision will not offset the gain.
It's different for you because you *enjoy* spending time and effort saving yourself pennies. But it's probably not a generalizable rule.
I think there are a lot more options available than the two you mentioned. You can invest the money in bonds, equities, funds, foreign exchange, gold, whatever. There is no reason not to examine the options available. The time and effort involved maybe a few minutes, max.
Quote from: garbon on July 17, 2009, 06:02:45 PM
Quote from: Monoriu on July 17, 2009, 05:56:08 PM
Failure to carefully consider your options before the CD is due may result in opportunities lost. Letting the CD automatically renew itself means one has not taken full consideration of the options available.
You are right that I should have pulled out my money ahead of time (as it was what I'd planned to do)...however with some quick and loose math, I think I lost less than $10* when compared to my most likely other course of action. I'll be alright. :)
And that's assuming that interests rates don't continue to decline. <_<
If you are going to do the quick and loose math anyway, might as well do it at a time when you still have a choice on what to do with the CD money, rather than after the fact ;)
Quote from: Monoriu on July 17, 2009, 06:07:17 PM
If you are going to do the quick and loose math anyway, might as well do it at a time when you still have a choice on what to do with the CD money, rather than after the fact ;)
Why? If the result is roughly the same, why should I spend time thinking about it? (I wouldn't have even done any math if we hadn't been discussing it here.) $7 loss and dropping (with dropping interest rates) is hardly something to get worked over.
Quote from: garbon on July 17, 2009, 06:12:21 PM
Why? If the result is roughly the same, why should I spend time thinking about it? (I wouldn't have even done any math if we hadn't been discussing it here.) $7 loss and dropping (with dropping interest rates) is hardly something to get worked over.
Because if you pulled your money out and invested it in [whatever], the result could be different.
You sound just like my wife, BTW :lol:
Quote from: Monoriu on July 17, 2009, 06:15:22 PM
Because if you pulled your money out and invested it in [whatever], the result could be different.
You sound just like my wife, BTW :lol:
But there were only a few courses of actions that I would have realistically taken. I could have kept it in the CD, put it in my checking, or put it in my savings account that has a higher interest rate (and what I used in my quick calculation). That's about it, dude.
When I go to any restaurant, I always go through the menu, and read every item on it. I then pick the best out of the choices available. I am appalled every time I dine with someone who tells the waiter to "decide for me".
Quote from: Monoriu on July 17, 2009, 05:56:08 PM
Failure to carefully consider your options before the CD is due may result in opportunities lost. Letting the CD automatically renew itself means one has not taken full consideration of the options available.
I would agree.
However since the financial meltdown I'm not doing anything with my money in equities anytime soon.
Though I briefly considered Nickel futures. :nerd:
Quote from: Monoriu on July 17, 2009, 06:24:23 PM
When I go to any restaurant, I always go through the menu, and read every item on it. I then pick the best out of the choices available. I am appalled every time I dine with someone who tells the waiter to "decide for me".
Well I'm appalled by that too*. After all, what does Joe Random waiter know about my tastes?
*I'm unlikely to read every item as I scan and when I see words like "beef" I don't need to bother reading the description. Also, I'm not sure what "best" means so I'm not sure if I can agree with that.
Quote from: Monoriu on July 17, 2009, 06:24:23 PM
When I go to any restaurant, I always go through the menu, and read every item on it. I then pick the best out of the choices available. I am appalled every time I dine with someone who tells the waiter to "decide for me".
My wife decides for me.
She knows what's best.
Filet au Poivre :mmm: :wub:
Quote from: Siege on July 17, 2009, 06:36:57 PM
Quote from: Monoriu on July 17, 2009, 06:24:23 PM
When I go to any restaurant, I always go through the menu, and read every item on it. I then pick the best out of the choices available. I am appalled every time I dine with someone who tells the waiter to "decide for me".
My wife decides for me.
She knows what's best.
:bleeding:
I have a lot of corporate bonds, which I am very pleased about. They give on average around 6,5% interest, and they also got up in value, because the interest on corporate bonds went down. They are slightly riskier than treasuries (because the companies can go broke), but give more interest.
However results in the past don't guarantee anything for the future.
P.S. iShares has a tracker "iShares € Corporate Bond Inc". It tracks the corporate bonds in Europe. Because it is based on many companies, the risk that your money disappears is none. Their dividend is less, around 5% I think.
My coffee cans bring no interest. However, I can dig them up anytime.
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?
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?
If you don't like risk, put everything in treasuries or corporate bonds. Reasonably safe and more interest than deposits.
If you can handle some risk, first ask yourself what the maximum amount is that you want to lose. Assuming that the maximum loss on equities each year is around 40%, calculate what part of your money you should put in equities and put the rest in treasuries. Repeat this exercise every year.
Suppose you want to lose not more than 10% of your money, put 25% of your money in equities and 75% in treasuries.
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?
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?
What 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.
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
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.
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).
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.
Mono, I think you should put your money into high-end, limited-edition Napoleonic history books. :whistle:
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 ;)
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
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:
Forget bonds, now's the time to get back into equity.
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.
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.
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.
The old rule of thumb is your the percentage of your portfolio in bonds should equal your age.
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.
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.
Quote from: Monoriu on 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.
Of course, but I think the near future favours equities. There's a recovery coming and I want to be all in when it happens. I'm currently around 15% cash and 85% equity. I'll eventually go into bonds, but not now.