A bad time for buying bonds?

Gin_and_Milk

Hi

I read an article the other day (can't remember where) about how now is a bad time for buying bonds, but a good time for buying shares. I have a small number of shares through HL and I've also set up a DD of £50 a month with a view to buying bonds over a long period of time.

I was just wondering whether or people were hanging fire with buying bonds? I don't have enough money to buy more shares, but I had been considering buying bonds with VLS 80/20 but I'm not so sure now.

Any thoughts?

Gin

Glen_Clark

I don't hold any bonds because as a small retail investor I can get better rates in retail savings accounts. Its a rare instance where the small investor gets a better deal than the large investor.

Gin_and_Milk

Thanks Glen
A daft question I know but what do you mean by small retail investor?
As you've probably gathered I'm completely new to all of this!

mapk

Gin_and_Milk wrote: »

Hi

I read an article the other day (can't remember where) about how now is a bad time for buying bonds, but a good time for buying shares. I have a small number of shares through HL and I've also set up a DD of £50 a month with a view to buying bonds over a long period of time.

I was just wondering whether or people were hanging fire with buying bonds? I don't have enough money to buy more shares, but I had been considering buying bonds with VLS 80/20 but I'm not so sure now.

Any thoughts?

Gin

Wondering similarly whether to reduce or increase VLS 60 holdings if bonds are likely to be such a poor deal going forward..

Gin_and_Milk

mapk wrote: »

Wondering similarly whether to reduce or increase VLS 60 holdings if bonds are likely to be such a poor deal going forward..

It's a tricky one. The article was very much in favour of buying shares but that's not an option for me at the moment. I'm not looking to make a fast buck with either, but if I'm going to get less bond for my money I might just put that £50 in my savings account for the foreseeable future.

dunstonh

It has been a bad time for buying bonds for the last 8 years.

Bonds are at priced higher and for some, that makes them unattractive. However, when bonds crash, it tends to be 5-10%. When stocks crash, it tends to be 20-50%. So, the level of downside is quite different. If you can get 3-5% yields and that crash doesnt happen for 3-5 years then you should cover the crash.

If people listened to the bonds are bad mantra being said 8 years then they would have missed out on a very good period. Yes, a downturn will occur at some point. That happens in every asset class. You dont know when, you dont know to what scale. You just know it will happen at some point.

As you've probably gathered I'm completely new to all of this!

In your first post, you said you hold shares and are looking at bonds. That is not typically what a small inexperienced investor would be doing. They would normally stick to funds.

Gin_and_Milk

dunstonh wrote: »

In your first post, you said you hold shares and are looking at bonds. That is not typically what a small inexperienced investor would be doing. They would normally stick to funds.

I know what you mean, and ordinarily I wouldn't have considered buying shares. I had set aside some money to buy shares from Lloyds via George Osborne's scheme. As we know that never came to fruition, but when the prices dropped I bought some anyway. Obviously if I lose it all I'll be really cheesed off, but I won't be panicking because it's an amount I'm prepared to write off. I'll just keep an eye on them over the years and see how it goes.

I'll do some more research on funds. I subscribe to Monevator and read HL's website a bit, but I'm the first to admit I don't fully understand everything. That said I do find it all very interesting which makes it easier to persist with it.

Glen_Clark

Gin_and_Milk wrote: »

Thanks Glen
what do you mean by small retail investor?

Well, you can get 1.2% instant access with Sainsbury's Bank with up to £75,000 guaranteed. If you were running a pension fund with £1 billion to invest in Sterling (because your liabilities are in Sterling) to get a similar level of security you would be stuck with Government Bonds - currently paying 0.67% for a 10 year fix.