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Type_45

Each of us ought to take personal responsibility for our own investment choices and not put anyone on a pedestal simply because they are held aloft as an "economist, analyst, strategist" or "proven billionaire".

adindas

masonic said:

adindas said:

masonic said:

adindas said:

Deleted_User said:

April is my preferred time to rebalance, but I have a look each quarter (and perhaps use spare cash in my SIPP to top up what's underweight). The general asset classes were near enough to targets this April, so I didn't do any rebalancing between equities vs bonds vs cash then; but this month they were too far out, so I've just (over the last week or so) been rebalancing from equities to bonds!

Coincidentally, that's the same thing I did in my last top-level rebalance, 18 months ago: see Time to sell equities and buy bonds? ... This is not unusual, in the sense that equities are usually expected to outperform bonds. What is unusual is that equities are down over the last 18 months, but bonds are down a lot more. Though in my case, with 75% equities + 20% bonds + 5% cash, although bonds have fallen a larger percentage, equities have lost me a bit more in £, because I have more of them.

Perhaps I made a mistake in holding so many bonds, but this is clearly not the time to change strategy: at lower prices, they now have higher expected returns. I know some posters on here have been avoiding bonds for a while. A quick search showed that the term "Bondpocalypse" was used online as early as 2010!

Equity will always outperform bond in the long run. Not many (if any) of the proven billionaire investors have ever suggested bonds as a good investment. So draw your conclusion.
Retail investor have advantage as they could put some percentage of their money into high interest saving accounts, Regular saving accounts, which is functioning like Bond but lower risk.

Not everyone is able to invest over a sufficiently long time horizon. Not everyone has the risk tolerance to be 100% equities. Nobody reading this forum is able to make investments on the same preferential terms as a billionaire investor. Savings accounts with similar access terms have lower returns than gilts at the moment. Locking your money away in a normal savings account for several years to get better rates could be considered higher risk, as you would be unable to access the money during the term if your circumstances changed. Regular savings accounts tend to have a low monthly deposit limit, so are unsuitable for larger sums. Fixed rate ISAs are a sort of half way house, as you can access the money subject to a fixed penalty (even if cashing in weeks before maturity), but these terms are likely to be less attractive than a short-dated gilt where the potential loss on selling prior to maturity tends to zero the closer you get to holding to term.

How  much cash in average an investor has. Does anyone have over 1 million in cash ?.

Hopefully not, but I fail to see the relevance when you are advocating people invest in cash rather than bonds. I doubt anyone here has £1m invested in bonds.

adindas said:

You could get easy access saving account paying 2.75% that could easily be deployed an a smaler chunks (DCA/Dripffeed) at anytime to equity.

This has nothing to do with the subject of this discussion (investing in bonds). Someone who is already invested in equities up to their risk tolerance doesn't need to buy more equities. The OP is considering selling equities in order to buy bonds.

adindas said:

There are a few RSA account paying 5%. reasonable number saving account are paying You could have more than £15k+ paying 5% interest.

Lloyds has one with a £400 per month deposit limit (after 12 months matures and you have to open a new one with £400), and Natwest has one with a £1000 balance limit. Have I missed any?

I used to like regular savers, but the rates on offer are only a little better than a 1 year fix.

adindas said:

Resonable number of  saving accounts are paying 4%pa 1 year fixed rate. How much yields do people get in their bond investments, not to mention decreasing in value.

The gilts people have been interested in pay >4% including a tax free capital gain. There are also index linked gilts, which can now be bought for a positive real return based on RPI (making them a good alternative to currently unavailable, and CPI linked, Index Linked Savings Certificates). That return is guaranteed if you hold to maturity, but you can sell at any time. They can be held in a SIPP or S&S ISA. If you were to sell early you stand a good chance of being better off than if you used a fixed cash ISA with a penalty, and clearly better off than a normal fixed savings account where your provider would refuse to let you access early. There's nothing wrong with using cash as part of a low risk portfolio allocation, but it would be wrong to say cash should replace bonds in all portfolios, just as much as it would be wrong to say bond investors should just sell up and buy equities.

adindas said:

Want to hear the hard lessons from you guys. Like a few people who were suggesting people to throw a few hundred thousands pounds lump sum early this year, while they themselves have never done that.

Who advised anyone to "throw a few hundred thousands pounds lump sum" into bonds early this year? Nobody, I suspect. I certainly had no interest in bonds at that time and was one of many voices warning what would happen to bond funds as interest rates rose.

adindas said:

When you beg a difference informing a DCA strategy, you would got heavy attacked from the same group of people as that is "timing the market". When people are not using their own money it is easy to tell other people to throw a few hundred thousands pounds.

It's your repeated flawed arguments in favour of DCA that get discredited, because they don't stand up to scrutiny. That isn't a personal attack, it is merely highlighting the flaws of a dubious strategy. Most people DCA out of their monthly income, and it is not something they have any choice about.

What may attract a little hostility is hijacking a discussion about bonds and rebalancing to throw in irrelevant curve-balls such as "1 million in cash", "billionaire investors" and "DCA strategy".

My argument is not flaw, I have been saying that since early this year in the bear market DCA is better than Lumpsum. This is also based on investment expert's opinion, not from random people on the internet. I posted a few links about it. I just wonder anyone still doubt about this nowadays ??. Well it might be for a few people, the same guys who were telling people not to be afraid to throw a few hundred thousands pounds early this year, while they themselves have never done that arguing if people did that it will mean timing the market. You might still find that thread if you search it. And you know who you are guys unless you have deleted your own posts.

You definitely miss a few regular saver account paying 5% interest. I am not quite sure whether it is still available now though. But that is just examples. There is also Easy-access savings that allows withdrawals with 5%+ interest, Barclays for instance is paying 5.12%.

And has been mentioned before there are reasonable number of saving accounts paying interest 4%+ for  one year fixed. and unlike bonds, they are risk free as there are under FSCS protection. JN Bank for instance is paying 4.75% for one year, Gatehouse is paying 4.50%, Tandem 4.25% and you could put  £85k each or even more if you do not care about FSCS protection. If you want to lock it longer say 18 months or 24 months you will get more interest.

Type_45

adindas said:

masonic said:

adindas said:

masonic said:

adindas said:

Deleted_User said:

April is my preferred time to rebalance, but I have a look each quarter (and perhaps use spare cash in my SIPP to top up what's underweight). The general asset classes were near enough to targets this April, so I didn't do any rebalancing between equities vs bonds vs cash then; but this month they were too far out, so I've just (over the last week or so) been rebalancing from equities to bonds!

Coincidentally, that's the same thing I did in my last top-level rebalance, 18 months ago: see Time to sell equities and buy bonds? ... This is not unusual, in the sense that equities are usually expected to outperform bonds. What is unusual is that equities are down over the last 18 months, but bonds are down a lot more. Though in my case, with 75% equities + 20% bonds + 5% cash, although bonds have fallen a larger percentage, equities have lost me a bit more in £, because I have more of them.

Perhaps I made a mistake in holding so many bonds, but this is clearly not the time to change strategy: at lower prices, they now have higher expected returns. I know some posters on here have been avoiding bonds for a while. A quick search showed that the term "Bondpocalypse" was used online as early as 2010!

Equity will always outperform bond in the long run. Not many (if any) of the proven billionaire investors have ever suggested bonds as a good investment. So draw your conclusion.
Retail investor have advantage as they could put some percentage of their money into high interest saving accounts, Regular saving accounts, which is functioning like Bond but lower risk.

Not everyone is able to invest over a sufficiently long time horizon. Not everyone has the risk tolerance to be 100% equities. Nobody reading this forum is able to make investments on the same preferential terms as a billionaire investor. Savings accounts with similar access terms have lower returns than gilts at the moment. Locking your money away in a normal savings account for several years to get better rates could be considered higher risk, as you would be unable to access the money during the term if your circumstances changed. Regular savings accounts tend to have a low monthly deposit limit, so are unsuitable for larger sums. Fixed rate ISAs are a sort of half way house, as you can access the money subject to a fixed penalty (even if cashing in weeks before maturity), but these terms are likely to be less attractive than a short-dated gilt where the potential loss on selling prior to maturity tends to zero the closer you get to holding to term.

How  much cash in average an investor has. Does anyone have over 1 million in cash ?.

Hopefully not, but I fail to see the relevance when you are advocating people invest in cash rather than bonds. I doubt anyone here has £1m invested in bonds.

adindas said:

You could get easy access saving account paying 2.75% that could easily be deployed an a smaler chunks (DCA/Dripffeed) at anytime to equity.

This has nothing to do with the subject of this discussion (investing in bonds). Someone who is already invested in equities up to their risk tolerance doesn't need to buy more equities. The OP is considering selling equities in order to buy bonds.

adindas said:

There are a few RSA account paying 5%. reasonable number saving account are paying You could have more than £15k+ paying 5% interest.

Lloyds has one with a £400 per month deposit limit (after 12 months matures and you have to open a new one with £400), and Natwest has one with a £1000 balance limit. Have I missed any?

I used to like regular savers, but the rates on offer are only a little better than a 1 year fix.

adindas said:

Resonable number of  saving accounts are paying 4%pa 1 year fixed rate. How much yields do people get in their bond investments, not to mention decreasing in value.

The gilts people have been interested in pay >4% including a tax free capital gain. There are also index linked gilts, which can now be bought for a positive real return based on RPI (making them a good alternative to currently unavailable, and CPI linked, Index Linked Savings Certificates). That return is guaranteed if you hold to maturity, but you can sell at any time. They can be held in a SIPP or S&S ISA. If you were to sell early you stand a good chance of being better off than if you used a fixed cash ISA with a penalty, and clearly better off than a normal fixed savings account where your provider would refuse to let you access early. There's nothing wrong with using cash as part of a low risk portfolio allocation, but it would be wrong to say cash should replace bonds in all portfolios, just as much as it would be wrong to say bond investors should just sell up and buy equities.

adindas said:

Want to hear the hard lessons from you guys. Like a few people who were suggesting people to throw a few hundred thousands pounds lump sum early this year, while they themselves have never done that.

Who advised anyone to "throw a few hundred thousands pounds lump sum" into bonds early this year? Nobody, I suspect. I certainly had no interest in bonds at that time and was one of many voices warning what would happen to bond funds as interest rates rose.

adindas said:

When you beg a difference informing a DCA strategy, you would got heavy attacked from the same group of people as that is "timing the market". When people are not using their own money it is easy to tell other people to throw a few hundred thousands pounds.

It's your repeated flawed arguments in favour of DCA that get discredited, because they don't stand up to scrutiny. That isn't a personal attack, it is merely highlighting the flaws of a dubious strategy. Most people DCA out of their monthly income, and it is not something they have any choice about.

What may attract a little hostility is hijacking a discussion about bonds and rebalancing to throw in irrelevant curve-balls such as "1 million in cash", "billionaire investors" and "DCA strategy".

Well a few people, the same guys who were telling people not to be afraid to throw a few hundred thousands pounds it Lumsump early this year, as if they did  dripfeeding, Dollar Cost Averaging (DCA), it will mean timing market. You might still find that thread if you search it. And you know who you are guys.

And you definitely miss a few regular saver account paying 5% interest. There is also Easy-access savings that allows withdrawals with 5%+ interest, Barclays for instance is paying 5.12%. I am not quite sure whether it is still available now though. But that is just examples.

And has been mentioned before there are reasonable number of saving accounts paying interest 4%+ for  one year fixed. and unlike bonds, they are risk free as there are under FSCS protection. JN Bank for instance is paying 4.75% for one year, Gatehouse is paying 4.50%, Tandem 4.25% and you could put  £85k. If you want to lock it longer say 8 month or 24 months you will get more interest.

Please find the thread. 

masonic

adindas said:

Well a few people, the same guys who were telling people not to be afraid to throw a few hundred thousands pounds it Lumsump early this year, as if they did  dripfeeding, Dollar Cost Averaging (DCA), it will mean timing market. You might still find that thread if you search it. And you know who you are guys.

I'm very doubtful anyone was saying anything like that about bonds or bond funds. Even drip feeding into bond funds from early this year would have been a bad idea. If you find a thread where people were advising anyone to pile into bonds please do share a link.

adindas said:

You definitely miss a few regular saver account paying 5% interest. I am not quite sure whether it is still available now though. But that is just examples. There is also Easy-access savings that allows withdrawals with 5%+ interest, Barclays for instance is paying 5.12%.

And has been mentioned before there are reasonable number of saving accounts paying interest 4%+ for  one year fixed. and unlike bonds, they are risk free as there are under FSCS protection. JN Bank for instance is paying 4.75% for one year, Gatehouse is paying 4.50%, Tandem 4.25% and you could put  £85k. If you want to lock it longer say 8 month or 24 months you will get more interest.

Regular savers are a bit of a gimmick. When there were 4+ 5% payers with reasonable monthly contribution limits (£250+), then it was a welcome boost in an environment of 1% rates. We should really have 8-10% regular savers to match those that were available back when fixed term accounts were paying ~5%.

I think you are missing the distinction between individual bonds and a bond fund. Individual gilts are risk free, unless you believe the UK government will default on them (it ain't going to happen). Even the FSCS is reliant on the Treasury to lend it money if it hits the fan. You can't hold a JN Bank account within your SIPP, nor your ISA.

adindas

masonic said:

adindas said:

Well a few people, the same guys who were telling people not to be afraid to throw a few hundred thousands pounds it Lumsump early this year, as if they did  dripfeeding, Dollar Cost Averaging (DCA), it will mean timing market. You might still find that thread if you search it. And you know who you are guys.

I'm very doubtful anyone was saying anything like that about bonds or bond funds. Even drip feeding into bond funds from early this year would have been a bad idea. If you find a thread where people were advising anyone to pile into bonds please do share a link.

Did I say Bonds? I do not even like to talk about bonds, as I listen more to proven investors who never consider Bond as a good investment.

masonic

adindas said:

masonic said:

adindas said:

Well a few people, the same guys who were telling people not to be afraid to throw a few hundred thousands pounds it Lumsump early this year, as if they did  dripfeeding, Dollar Cost Averaging (DCA), it will mean timing market. You might still find that thread if you search it. And you know who you are guys.

I'm very doubtful anyone was saying anything like that about bonds or bond funds. Even drip feeding into bond funds from early this year would have been a bad idea. If you find a thread where people were advising anyone to pile into bonds please do share a link.

Did I say Bonds? I do not even like to talk bonds, as I listen more to proven investors who never consider Bond as a good investment.

This thread is about bonds. You replied to my post about bonds. If you don't like to talk about bonds, then you are in the wrong thread. You may not like bonds, but there is no need to disrupt discussions of others who wish to talk about them in a thread where they are clearly the subject of discussion.

P933alilli

Has the outlook for bonds improved only for money being invested now? Will money invested in bonds via lifestrategy funds be stuck with the lower yields they were bought at the time earlier in the year or does it depend on the duration?

masonic

Collyflower1 said:

Has the outlook for bonds improved only for money being invested now? Will money invested in bonds via lifestrategy funds be stuck with the lower yields they were bought at the time earlier in the year or does it depend on the duration?

Those already invested in bond funds have taken the capital hit, but they will enjoy the same uplift to the yield to maturity as someone investing new money today. A long term holder has just seen their returns pushed out into future income - the reverse of what happened when interest rates were slashed to historic lows and returns were pulled forward into capital value.  It's regrettable that those investing earlier this year have had to suffer predictable capital losses while interest rate expectations rapidly rose, but that ship has sailed and what they hold today is the same as anyone investing new money.

If you take a look at Vanguard's own 10 year return expectations, bonds are anticipated to return only a couple of percent less than equities, but with less than half the volatility:

https://www.vanguard.co.uk/professional/insights-education/insights/vanguard-economic-and-market-update

The current yield curve implies higher returns than this, which suggests bonds are now looking fair value - cheap based on this analysis. The figures at end of 2021 were 0.8-1.8% 10 year annualised returns for bonds. This is effectively what someone buying at that time would have locked into and is the origin of the capital loss they are now seeing.

See also https://monevator.com/rising-bond-yields-what-happens-to-bonds-when-interest-rates-rise/ for further explanation.

adindas

masonic said:

adindas said:

masonic said:

adindas said:

masonic said:

adindas said:

masonic said:

adindas said:

Well a few people, the same guys who were telling people not to be afraid to throw a few hundred thousands pounds it Lumsump early this year, as if they did  dripfeeding, Dollar Cost Averaging (DCA), it will mean timing market. You might still find that thread if you search it. And you know who you are guys.

discussion.

Back on topic, the points I've made that bonds can have a place in a balanced portfolio seem to have escaped any criticism from you, so I take it that you concede that point? Or are you saying everyone holding bonds, and every financial adviser putting bonds in clients portfolios is wrong to do so?

Bonds are, without doubt, a much more attractive investment now than they were 6 months ago, which is why they are being talked about here and elsewhere.

I definitely can not say the financial adviser are wrong especially when they are licenced. But I have seen in a few threads a few people are complaining about their financial adviser strategy which let them to unwanted loss. Some are even using strong words, you might have seen that as you seem to be very active and very vocal in the investment platforms.

But I do know financial advisers are not better than proven investors. Many (if not all) of proven investors do not see bond as a good investment.

https://www.nytimes.com/2018/04/13/business/warren-buffett-isnt-a-fan-of-bonds-but-they-may-be-good-for-you.html

https://www.business-standard.com/article/markets/bonds-are-not-the-place-to-be-these-days-warns-warren-buffett-121022800114_1.html

Definitely there is always something to learn from other people. Also, sensible people will listen more to proven investors strategy rather than random guy on the internet. Certainly, it will need to be adapted to individual circumstances whether his main goal is wealth creation or wealth preservation. Normally wealth preservation is more applicable to those who already very wealthy.

In the long run equity always beats bonds. That is fact.

For many people here on MSEs saving accounts might be a better alternatives. A few saving accounts are paying 5%+, reasonable number of easy access are paying 4.5%+  and many of the are easy access and it is risk free. This is personal opinion so take it with a grain of salt. But unlike some people here on MSEs who early this year were  telling people not to be afraid to throw a few thousand pounds (instead of drip-feed, DCA) in the stock market while there is no evidence they themselves have done that; I put my money where my mouth is.

How much return did you get with bonds investments guys you might want to share your experience ??

When things is cheaper now it is definitely more attractive than when there were more expensive a few months ago, that is common sense. It is not necessary the best strategy out there though.

masonic

adindas said:

masonic said:

adindas said:

masonic said:

adindas said:

masonic said:

adindas said:

masonic said:

adindas said:

Well a few people, the same guys who were telling people not to be afraid to throw a few hundred thousands pounds it Lumsump early this year, as if they did  dripfeeding, Dollar Cost Averaging (DCA), it will mean timing market. You might still find that thread if you search it. And you know who you are guys.

discussion.

Back on topic, the points I've made that bonds can have a place in a balanced portfolio seem to have escaped any criticism from you, so I take it that you concede that point? Or are you saying everyone holding bonds, and every financial adviser putting bonds in clients portfolios is wrong to do so?

Bonds are, without doubt, a much more attractive investment now than they were 6 months ago, which is why they are being talked about here and elsewhere.

I definitely can not say the financial adviser are wrong especially when they are licenced. But I have seen in a few threads a few people are complaining about their financial adviser strategy which let them to unwanted loss. Some are even using strong words, you might have seen that as you seem to be very actives and very vocals in the investment platforms.

But I do know financial advisers are not better than proven investors. Many (if not all) of proven investors do not see bond as a good investment.

I've contributed to a couple of the threads where people had been placed into a new portfolio when the losses could have been foreseen and avoided, and was rather critical of this. There was not even an attempt to go to short-dated bonds, which have very little interest rate sensitivity and were used very effectively by the wealth preservation funds that are often discussed on this forum.

adindas said:

https://www.nytimes.com/2018/04/13/business/warren-buffett-isnt-a-fan-of-bonds-but-they-may-be-good-for-you.html

https://www.business-standard.com/article/markets/bonds-are-not-the-place-to-be-these-days-warns-warren-buffett-121022800114_1.html

These are articles from 2018 and 2021, the times when interest rates were about to start to rise from historic lows and bonds were just "return free risk". These support the arguments made here and elsewhere that "right now", meaning at that time, bonds were a wasting asset and a bad place to be. No argument there.

However, having fallen in price significantly, and increased in yield, bonds are now investable again.

adindas said:

Definitely there is always something to learn from other people. But sensible people will listen more to proven investors strategy rather than random guy on the internet. Certainly, it will need to be adapted to individual circumstances.

In the long run equity always beats bonds. That is fact.

I agree that we should always be driven by data and not unsubstantiated opinions. I agree also that over a long enough time horizon, equities can be expected to deliver higher returns than bonds. The purpose of bonds is not to deliver the highest returns. Individual government bonds deliver a guaranteed return locked in at the point of purchase if held to maturity. Some provide a guaranteed inflation protected return. Bond funds are a convenient financial instrument to obtain broad exposure to the asset class, but care needs to be taken at certain times (for example this year) as bond funds never mature, so you will need to sell at the market price one day. As I've already mentioned, most people cannot tolerate a 100% equities portfolio and/or do not have a long enough holding period for this, so this is where bonds have a place.

adindas said:

Also for many people here on MSEs saving accounts might be a better alternatives. A few saving accounts are paying 5%+, reasonable number of easy access are paying 4.5%+  and many of the are easy access ans it is risk free. This is personal opinion so take it with a grain of salt.

How much return did you get with bonds investments guys you might want to share your experience ??

When things is cheaper now it is definitely better than when there were more expensive, that is common sense. It is not necessary the best strategy out there though.

Savings accounts have now overtaken individual gilts, a few weeks ago it was the other way around. Two reasons gilts may still be attractive are that they can be sold at any time, unlike fixed savings accounts that must be held to term, and the majority of returns from an individual gilt can be made up of a tax exempt capital gain, which can be useful to those who would pay tax on interest. If the money is trapped in a SIPP, bonds are the only way of obtaining fixed interest with a high rate of return. If in a S&S ISA, then it would be necessary to do a partial transfer out (which not all providers allow) in order to shift to a cash ISA. Further to this, US treasuries can be an interesting low risk hedge against local currency devaluation.

Regarding funds, now that the bonds bubble has deflated, bond funds should return to a negative correlation with equities, so there would be a flight to safety in times of recession etc now that there is a risk free return worth having. This enables a lower percentage of bonds to be held for the same volatility dampening effect as cash - translating to higher % equities which we both agree is the real driver of returns.

There was a good real world example posted by aroominyork of investing an inheritance in a short dated gilt for a tax free capital gain (plus small amount of interest) which was larger than the net rate of interest available at that time on the best savings account of a similar term.

So there are reasons to go for one vs the other depending on your circumstances and at different times. It pays not to be prejudiced against any particular option and simply use the one that is best suited to your circumstances and objectives.