Your Experiences with Bonds

Cotta

Hi All,

Does anyone invest in Bonds (not premium) and if so how do you find the returns and risks? I've been contemplating bonds but some have advised they're too safe and as a result the returns are too low.

Thanks

kidmugsy

Cotta wrote: »

Hi All,

Does anyone invest in Bonds (not premium) and if so how do you find the returns and risks?

We bought a "ladder" of several Gilts in an S&S ISA in 1999 when we sold all our equities. They've done very well, but the extent of the success may well not be repeated for a generation or more, since it depended on interest rates marching lower and lower.

The last mature in a few years time. I'm tempted to buy some long-maturities soon, as a balance to the equities that we expect to buy.

The other category that did well for us is Convertibles but we no longer hold any. I'm tempted to look at them again.

Reaper

I wouldn't touch government bonds (gilts), the boat has well and truly sailed on that one IMHO.

Corporate bonds are better BUT it depends what you think will happen on inflation & interest rates. They pay fixed returns so rates that look good today won't look very clever if inflation and interests rates spiral up following all the QE the central banks have been doing.

Short dated bonds that mature in a couple of years are less risky than long dated ones for that reason.

You also have the risk of the company (or government) you are investing in going bust. It's the riskier companies that offer higher yields of course.

dunstonh

What types of bonsds?

you mention no premium bonds but are you referring to corporate bonds, high yield bonds, stategic bonds, investment bonds, savings bonds etc?

Cotta

dunstonh wrote: »

What types of bonsds?

you mention no premium bonds but are you referring to corporate bonds, high yield bonds, stategic bonds, investment bonds, savings bonds etc?

All of the above.

John1993_2

Cotta wrote: »

All of the above.

The expected return is related to the perceived risk, so it doesn't reallly make sense to say that tey are "too safe". Greek Govt bonds were yielding over 20% a while back, which is not exactly a shabby return.

On the safety issue, a colleague bought EUR 500,000,000 of Russian Government bonds in the early 2000s, and they were all defaulted on, so he never saw as much as a centime back.

And tis was back when an EUR 500m loss on a deal was still considered to be pretty big...

opinions4u

James?
Basildon?
Brooke?
Albermarle and?

bigadaj

John1993 wrote: »

The expected return is related to the perceived risk, so it doesn't reallly make sense to say that tey are "too safe". Greek Govt bonds were yielding over 20% a while back, which is not exactly a shabby return.

On the safety issue, a colleague bought EUR 500,000,000 of Russian Government bonds in the early 2000s, and they were all defaulted on, so he never saw as much as a centime back.

And tis was back when an EUR 500m loss on a deal was still considered to be pretty big...

Very true, now the fine can be bigger than that, doesn't look impressive next to the london whale, how we reminisce when it was only a few hundred million!

Debt-Free-Wannabee

dunstonh wrote: »

What types of bonsds?

you mention no premium bonds but are you referring to corporate bonds, high yield bonds, stategic bonds, investment bonds, savings bonds etc?

Definatly all of the above