"Bonds in a bubble" - What does that mean?

d.white

I am 100% in equities at the moment and was planning to balance my portfolio with 10-20% bonds. I had researched the following and identified these:
iShares Markit iBoxx GBP Corporate Bond ex-Financials (GBP) ISXF (3.76% yield)
L&G Fixed Interest Trust I Acc (4.44% yield)
Vanguard U.K. Infl-Lnkd Gilt Idx Acc (0.16% yield)

But having read this thread and the consensus that bond prices are now at a high point, is now not the time to be adding bonds to my portfolio?

A_Flock_Of_Sheep

gadgetmind wrote: »

You paid a higher price than when you first bought so your average buying price is higher. Mathematically this is the only way it can be.

Hmm! Do you think I should have waited for a drop below the original price? But when do you dip in? You can't predict when the market will fall and rise.

Time in market not timing??

Ohh and many many thanks for detailing the infrastructure shares I have been searching for such things to build the income side of my portfolio. I have been reading some "noise" on tinterweb saying that infrastructure is a good balancing component to equities. Maybe more so than bonds at the moment.

gadgetmind

A_Flock_Of_Sheep wrote: »

Do you think I should have waited for a drop below the original price? But when do you dip in? You can't predict when the market will fall and rise.

You can't. Some say you can, but the burden of proof is on them

I was just explaining how your average buy price is now higher. But buy price is fairly meaningless in the long term.

Ohh and many many thanks for detailing the infrastructure shares I have been searching for such things to build the income side of my portfolio. I have been reading some "noise" on tinterweb saying that infrastructure is a good balancing component to equities. Maybe more so than bonds at the moment.

That was my thinking a few years ago, and I'd consider the same if creating a portfolio now. Yes, they are on a premium, but so are bonds, but the income of the former tends to be index linked.

Someone in their 20s and 30s probably need not look at property, nor PFI infrastructure, nor general infrastructure, not fixed interest, and can be an equity hog. When you start hitting 40s or 50s, then "holding lots of different stuff" starts to make sense.

A_Flock_Of_Sheep

gadgetmind wrote: »

You can't. Some say you can, but the burden of proof is on them

I was just explaining how your average buy price is now higher. But buy price is fairly meaningless in the long term.



That was my thinking a few years ago, and I'd consider the same if creating a portfolio now. Yes, they are on a premium, but so are bonds, but the income of the former tends to be index linked.

Someone in their 20s and 30s probably need not look at property, nor PFI infrastructure, nor general infrastructure, not fixed interest, and can be an equity hog. When you start hitting 40s or 50s, then "holding lots of different stuff" starts to make sense.

Thanks so much. I am guessing any yield from the PFI funds in H&L S&S ISA is in the income section. Could one use the yield to draw income or use some of the yield as income but also use it to purchase additional ISA components such as adding to an Equity fund in a bear market? Have I got the idea?

gadgetmind

A_Flock_Of_Sheep wrote: »

I am guessing any yield from the PFI funds in H&L S&S ISA is in the income section.

Yes. I let it accumulate there until I have enough to make another purchase.

Could one use the yield to draw income or use some of the yield as income but also use it to purchase additional ISA components such as adding to an Equity fund in a bear market?

Both are options, but we have *never* taken money from ISAs (nee PEPs) since we started using them in the last 80s.

Up_date

There is aother type of Bond, A fixed rate savings Bond issued by Banks . B/S.

My question is are B/S fixed rate Savings Bonds covered by the £85.000 F.S.C.S compensation Scheme. Its not meantioned as not being coverd by FSCS on their web site, but its also not meantioned as covered.

I meantion this as most fixed rate saving bonds will not let you get hold of any of your money in any situation, till the end of the fixed period.

grizzly1911

Up_date wrote: »

There is aother type of Bond, A fixed rate savings Bond issued by Banks . B/S.

My question is are B/S fixed rate Savings Bonds covered by the £85.000 F.S.C.S compensation Scheme. Its not meantioned as not being coverd by FSCS on their web site, but its also not meantioned as covered.

I meantion this as most fixed rate saving bonds will not let you get hold of any of your money in any situation, till the end of the fixed period.

If it is a standard savings bond then it should be covered under the FCSC £85k limit.

The fact it is fixed is only in duration, so you get a slightly better rate. The bank/building society can budget for it maturing and know they have got their mits on it for x years.

If you are worried ask the institution.

The bonds they are talking about here are investments where the underlying value can vary as can the yields at any given point.

Banks and building societies do offer hybrid savings / investment products which are different again and not generally that wonderful a product.

atush

A_Flock_Of_Sheep wrote: »

Hmm! Do you think I should have waited for a drop below the original price? But when do you dip in? You can't predict when the market will fall and rise.

Time in market not timing??

Ohh and many many thanks for detailing the infrastructure shares I have been searching for such things to build the income side of my portfolio. I have been reading some "noise" on tinterweb saying that infrastructure is a good balancing component to equities. Maybe more so than bonds at the moment.

You talk of income investing, but you seem to be inclined towards Day trading and trying to time the market?

I know you are new and enthusiastic, but I think you are over eager and need to keep reading, while investing monthly and letting your mind (and hormones?) settle a bit.

If you want to make new investments (such as infrastructure) then go for it. But buy as and when and then watch the market play out.

Thrugelmir

Companies are increasingly turning to the bond markets to raise capital funding. So worth keeping an eye on new issues.