Retirement portfolio for someone in their 60's

Audaxer

bigadaj wrote: »

Risk of capital loss presumably.

Is he meaning there is a big risk of losing a significant amount of capital by investing in these ITs, or 'just' that they are likely to be very volatile and will bounce back in the future but will continue to have high yields?

Triumph13

Audaxer wrote: »

Is he meaning there is a big risk of losing a significant amount of capital by investing in these ITs, or 'just' that they are likely to be very volatile and will bounce back in the future but will continue to have high yields?

The combination of low central bank interest rates and QE has massively driven up bond prices. If interest rates go back up then bond prices will come tumbling down - especially if the central banks are trying to sell some of their gigantic holdings from QE.
Even if interest rates stay the same, basic supply and demand says that if and when central banks change from being the principle demand to a major source of supply then the price falls through the floor.
None of this impacts you if you have bought bonds that you intend to hold to maturity, except that you've probably bought them at an expensive time. If, on the other hand, you are holding long-dated gilts that you want to sell...

Audaxer

Triumph13 wrote: »

The combination of low central bank interest rates and QE has massively driven up bond prices. If interest rates go back up then bond prices will come tumbling down - especially if the central banks are trying to sell some of their gigantic holdings from QE.
Even if interest rates stay the same, basic supply and demand says that if and when central banks change from being the principle demand to a major source of supply then the price falls through the floor.
None of this impacts you if you have bought bonds that you intend to hold to maturity, except that you've probably bought them at an expensive time. If, on the other hand, you are holding long-dated gilts that you want to sell...

Are these high yield bonds more risky than for instance the type of bonds that are included in the VLS products?