Is a 5-year fixed around 4.6% a no-brainer right now

longleggedhair

I personally wouldn’t consider tying up my money for such a protracted period unless there was some way to access the funds early if needed which virtually nobody offers anymore. Life can quickly change and you never know what is around the corner.

TobyCG

Thanks for all the input.

I am aware of the dangers of locking away funds that could be needed but I'd only be putting a relatively small percentage of funds into longer term bonds and, as some here have suggested, would have a 'spread' or 'ladder' of terms across a selection of products.

Regards the returns, I thought 4.6% looked pretty good considering we're at peak interest rates right now so the only way is down.  As I said, it's basically the same gamble you take with fixed-rate mortgages but in reverse.

Tucosalamanca

TobyCG said:

considering we're at peak interest rates right now so the only way is down.

You have absolutely no idea if that statement is correct.

There's so much going on in the world right now, you'd just as well flip a coin to predict future interest rates.

Albermarle

considering we're at peak interest rates right now so the only way is down. 

I have been thinking this for about 18 months now, but so far nothing much  has happened.

saajan_12

Its not just about whether that's the right play on interest rates. The market, made up mostly of people who bet on interest rates for a living, think that 4.6% is "about right" for 5 years, incorporating the chance of rates going up/down and the chance of that bond issuer defaulting. So unless you know something they don't, you're equally likely to well as you are to do badly out of that. 

However the other more relevant factors are 
* is that the right risk profile - eg could you get higher returns from a (partly) equity portfolio, albeit higher risk?
* is that the right duration for you - eg do you definitely not need the money for 5 years, what if you do and the borrowing cost is higher, or do you have an emergency fund separately?