bond investment going up and down

JeffMason

Hello,

I inherited some money invested in a bond a few years ago. I have left i there until now while I decide what it can be best used for or where I want to move it. I can take the money without fee at this point but haven't touched it yet. This past year the total has fluctuated up and down quite a lot, and it is currently at a high point. Should I be taking money out while it is high or just leave it until I need it? I wonder if it's smart to skim amounts off the top and reinvest elsewhere when the bond is doing well or if that kind of thinking makes no difference at all!?

Thank you very much for any advice.

MaxiRobriguez

Your bonds were performing "poorly" earlier on in the year because other investors sold out to pick up stocks after stocks had a correction. Your bond prices are currently going up because investors are expecting the central banks to reduce interest rates on the back of a slowdown in global economic growth, which in itself is a tailwind for bonds.

If you sell and reinvest, you have to choose between bonds with lower coupon rates or stocks in an environment whereby global growth is slowing.

I'd retain your bonds for now at least, ride it as a winner.

Linton

JeffMason wrote: »

Hello,

I inherited some money invested in a bond a few years ago. I have left i there until now while I decide what it can be best used for or where I want to move it. I can take the money without fee at this point but haven't touched it yet. This past year the total has fluctuated up and down quite a lot, and it is currently at a high point. Should I be taking money out while it is high or just leave it until I need it? I wonder if it's smart to skim amounts off the top and reinvest elsewhere when the bond is doing well or if that kind of thinking makes no difference at all!?

Thank you very much for any advice.

The term "bond" covers a wide range of very different things. It may be what Maxi-R (post #2) is taking it to be but it might not. Perhaps you can tell us what your bond is? My guess is that it might be an "investment bond" that invests in a possibly wide range of things but I could be wrong. Then we could give some appropriate suggestions/explanations.

JeffMason

Linton wrote: »

The term "bond" covers a wide range of very different things. It may be what Maxi-R (post #2) is taking it to be but it might not. Perhaps you can tell us what your bond is? My guess is that it might be an "investment bond" that invests in a possibly wide range of things but I could be wrong. Then we could give some appropriate suggestions/explanations.

Yes, it's an investment bond. The total amount of it is spread across a range of medium risk companies and investments I'm told. I can log in and see exactly what the investments are and get reports etc.

But like I said, I inherited it and have been told it's a sound and solid place to leave it for the past couple of years, so have done just that.

Linton

JeffMason wrote: »

Yes, it's an investment bond. The total amount of it is spread across a range of medium risk companies and investments I'm told. I can log in and see exactly what the investments are and get reports etc.

But like I said, I inherited it and have been told it's a sound and solid place to leave it for the past couple of years, so have done just that.

Yes its normal for medium risk company investments to move up and down quite a bit. In the longer term, say 5-10 years, you would expect them to be significantly up but in the meantime they could perhaps have temporary falls of say 40% which is what happened in the 2008/9 crash and certainly will have temporary falls in the 10-20% region perhaps when Trump says or does something silly. Last year was poor but this year, certainly at the moment, company investments are performing well.



So your bond is definitely appropriate only for the long term. If you are needing some of the money in the next few years it may be sensible to move what you need to something less volatile now.


If you bond is large, say at least £50K-100K, it may be sensible to take professional advice.

steampowered

Rather than looking at the bond in isolation, you should look at it in the context of your overall investment portfolio, and consider whether your asset allocation is appropriate for your risk appetite.

For example - if your bond is worth £100k and your overall investment portfolio is another £100k - then the bond is 50% of your total portfolio.

Which would raise the question - do you want 50% of your total portfolio in this bond?

DrSyn

The term bond just means a loan to a government or company.You have the range that goes from US treasury bonds all the way up to high risk "junk bonds". What you & I regard as "medium risk" can be very different.

Linton

DrSyn wrote: »

The term bond just means a loan to a government or company.You have the range that goes from US treasury bonds all the way up to high risk "junk bonds". What you & I regard as "medium risk" can be very different. You really need is provide more details.

In this case it is nothing to do with a loan. An "investment bond" is a tax planning vehicle which is largely obsolete now thanks to the availability of the much more effective and much less complex S&S ISAs.

JeffMason

Thanks for all the comments. All very interesting! I'm not sure I'm any closer to knowing if I should leave it or get it out of there asap.

It's more than 100K, closer to 200K, and is the vast majority of money I have. I'll be using most of it to buy a house in the next few years.

ChopperST

JeffMason wrote: »

Thanks for all the comments. All very interesting! I'm not sure I'm any closer to knowing if I should leave it or get it out of there asap.

It's more than 100K, closer to 200K, and is the vast majority of money I have. I'll be using most of it to buy a house in the next few years.

If its for a house purchase needed in a few years get it out and into cash ASAP. Worryingly you still haven't told us what the "bond" actually is...

SonOf

If it is an investment bond tax wrapper and nearly £200k, then you need to be looking at tax. It may be better to surrender over multiple policy years and not just all in one go.