Announcement

Collapse
No announcement yet.

Anyone here invest in individual bonds?

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    #16
    Originally posted by disneysteve View Post

    Let's say I go out tomorrow and buy a bond that matures in 2025 and has a yield to maturity of 3%.
    You can't, that's the problem. 10 year treasury bond yields are at 0.73% right now. If rates go up because the economy roars back, the rate can quadruple over a short time frame. So it's impossible for me to sit my money in a 10 year bond with a yield of 0.73%. That's not going to happen when there are bonds out there giving out 3% in 2025 if the economy normalize. I am more likely to keep a Bond giving me 4-5% over the next 10 years than bond giving me way below inflation. Just like stocks where people wait for a better entry point, I see bonds to be the same, a better return entry point. And I know for a fact that the rates will be better in the future than today.

    Bond at near 0% interest rate is like buying a stock at an all time high before market open after the CEO has announced he committed fraud.
    Last edited by Singuy; 10-15-2020, 04:54 PM.

    Comment


      #17
      Our of curiosity, what is the highest interest 5 yr CD out there? Anyone know?

      Comment


        #18
        Originally posted by Scallywag View Post
        Our of curiosity, what is the highest interest 5 yr CD out there? Anyone know?
        The highest on bankrate.com is 1.01%.

        But a quick search for corporate bonds at Schwab shows plenty paying 3-4 times that. Obviously not comparable products and the bonds have different risks but still they are readily available.
        Steve

        * Despite the high cost of living, it remains very popular.
        * Why should I pay for my daughter's education when she already knows everything?
        * There are no shortcuts to anywhere worth going.

        Comment


          #19
          Originally posted by disneysteve View Post

          The highest on bankrate.com is 1.01%.

          But a quick search for corporate bonds at Schwab shows plenty paying 3-4 times that. Obviously not comparable products and the bonds have different risks but still they are readily available.
          Corporate bonds reflect market performance, IMO, and are also very risky. I briefly held JNK & LQD for the yields but want a "safe" vehicle for my future down payment.

          Comment


            #20
            I had an individual bond ladder going for a while. Each bond was set to mature when we needed the money for income, but now it doesn't seem worthwhile to buy bonds and tie up the money.

            EE savings bonds currently pay:
            "The annual interest rate for EE Bonds issued from May 1, 2020, through October 31, 2020, is 0.10%."
            But, if you hold them for 20 years:
            "Electronic bonds are sold at face value (not half of face value). They start to earn interest right away on the full face value. Treasury guarantees that for an electronic EE Bond with a June 2003 or later issue date, after 20 years, the redemption (cash-in) value will be at least twice the purchase price of the bond. If the redemption (cash-in) value is not at least twice the purchase price of the electronic bond as a result of applying the fixed rate of interest for those 20 years, Treasury will make a one-time adjustment at the 20-year anniversary of the bond's issue date to make up the difference."
            https://www.treasurydirect.gov/indiv...005andafer.htm

            You can also invest in I bonds that are supposed to keep up with inflation.

            A couple of the down sides are:
            1. In any one calendar year for one Social Security Number: You may buy up to $10,000 in electronic EE bonds, up to $10,000 in electronic I bonds, and, using your tax refund, up to $5,000 in paper I bonds. https://www.treasurydirect.gov/indiv...comparison.htm
            2. For electronic bonds you have to go through treasury direct (I am not a fan of the TD website)

            I haven't invested in any new savings bonds in a while, though, because at my age 20 years is quite a long time horizon. (Also, I am not a fan of the TD website).
            So, some of our bond allocation is in the G fund of the TSP and some of the allocation is in a short term treasury bond index fund and some in a total bond index fund and some is in an annuity (with a guaranteed 4.5% interest) and finally, funding requirements for the next year are in a MMF.

            Comment


              #21
              Originally posted by Scallywag View Post
              Our of curiosity, what is the highest interest 5 yr CD out there? Anyone know?
              Without doing an extensive search (just going to depositaccounts.com and pulling up 5 yr CD rates), so with the caveat that you may be able to find higher especially locally, 1.50% APY in my geography.

              Comment


                #22
                Originally posted by scfr View Post

                Without doing an extensive search (just going to depositaccounts.com and pulling up 5 yr CD rates), so with the caveat that you may be able to find higher especially locally, 1.50% APY in my geography.
                Thank you! It's 1.0% here. I purchased a couple of apartment REITS that give a better return than that although it will be subject to market risk.

                BTW, what happens if Biden wins? Will the Feds LIKELY stop supporting the stock & repo markets?

                Comment


                  #23
                  Originally posted by Scallywag View Post
                  BTW, what happens if Biden wins? Will the Feds LIKELY stop supporting the stock & repo markets?
                  Biden winning, and especially if the Democrats gain control of the Senate, will be great for the market. Wall Street has been betting big on that outcome. I posted a few links recently to articles discussing how the big banks and corporations are donating heavily to Biden and other Democratic campaigns. Moody and other companies have been advising their clients based on the assumption that Biden will win. And historically, the market performs better under Democratic administrations.

                  As for the Fed support, keep in mind that it's been the Democrats in the House passing stimulus and relief packages and the Republicans in the Senate refusing to do the same.
                  Steve

                  * Despite the high cost of living, it remains very popular.
                  * Why should I pay for my daughter's education when she already knows everything?
                  * There are no shortcuts to anywhere worth going.

                  Comment


                    #24
                    Originally posted by disneysteve View Post
                    Biden winning, and especially if the Democrats gain control of the Senate, will be great for the market. Wall Street has been betting big on that outcome. I posted a few links recently to articles discussing how the big banks and corporations are donating heavily to Biden and other Democratic campaigns. Moody and other companies have been advising their clients based on the assumption that Biden will win. And historically, the market performs better under Democratic administrations.

                    As for the Fed support, keep in mind that it's been the Democrats in the House passing stimulus and relief packages and the Republicans in the Senate refusing to do the same.
                    So IF Trump wins can we expect a crash? I am trying to better understand this

                    Comment


                      #25
                      Originally posted by Scallywag View Post

                      So IF Trump wins can we expect a crash? I am trying to better understand this
                      Aren't we all.

                      That's a tougher question. I think a Biden win has been priced into the current market. I'm no expert but I suspect that would probably mean a drop if Trump wins since that isn't the outcome the market has been betting on.
                      Steve

                      * Despite the high cost of living, it remains very popular.
                      * Why should I pay for my daughter's education when she already knows everything?
                      * There are no shortcuts to anywhere worth going.

                      Comment


                        #26
                        Originally posted by disneysteve View Post
                        Biden winning, and especially if the Democrats gain control of the Senate, will be great for the market. Wall Street has been betting big on that outcome. I posted a few links recently to articles discussing how the big banks and corporations are donating heavily to Biden and other Democratic campaigns. Moody and other companies have been advising their clients based on the assumption that Biden will win. And historically, the market performs better under Democratic administrations.

                        As for the Fed support, keep in mind that it's been the Democrats in the House passing stimulus and relief packages and the Republicans in the Senate refusing to do the same.
                        Usually democrats are terrible for the market I don't know why that's said. Because Clinton and Obama did well. Well trump has been awesome super charging the stock market. Now the rest of the plebians well tough luck for everyone else missing out on the stock market. Those "losers" will support trump but haven't realized he's done them in as he would say.
                        LivingAlmostLarge Blog

                        Comment


                          #27
                          Originally posted by LivingAlmostLarge View Post

                          Usually democrats are terrible for the market I don't know why that's said.
                          From 1926-2019, the average annual return of the S&P 500 under Republican presidents has been 9.12%.
                          The average annual return under Democratic presidents has been 14.94%.
                          Steve

                          * Despite the high cost of living, it remains very popular.
                          * Why should I pay for my daughter's education when she already knows everything?
                          * There are no shortcuts to anywhere worth going.

                          Comment


                            #28
                            Originally posted by disneysteve View Post
                            From 1926-2019, the average annual return of the S&P 500 under Republican presidents has been 9.12%.
                            The average annual return under Democratic presidents has been 14.94%.
                            Those returns seem so faraway, so long ago, belonging to a different era, almost.

                            I'd be lucky if we investments made 7% each year, going foward so we'd have our 3 millions in 25 years' time. Sigh!

                            Comment


                              #29
                              Originally posted by Scallywag View Post

                              Those returns seem so faraway, so long ago, belonging to a different era, almost.

                              I'd be lucky if we investments made 7% each year, going foward so we'd have our 3 millions in 25 years' time. Sigh!
                              The S&P 500 return in 2019 was 30.43%. If you include reinvested dividends, it was 33.07%. Not so far away.

                              Not that 7% is awful but don't give up on the historical averages sticking around.
                              Steve

                              * Despite the high cost of living, it remains very popular.
                              * Why should I pay for my daughter's education when she already knows everything?
                              * There are no shortcuts to anywhere worth going.

                              Comment


                                #30
                                Originally posted by disneysteve View Post

                                The S&P 500 return in 2019 was 30.43%. If you include reinvested dividends, it was 33.07%. Not so far away.

                                Not that 7% is awful but don't give up on the historical averages sticking around.
                                What I meant to say was that 7% is the minimum return we need to make to ensure we get to our individual etirement figure. Then, we have an additional 20 years before my son would likely "be on his own", potentially completely dependent on the size of the nest egg that we leave him. IF we reliably could make a 7% return on our current investments and contribute the max to our IRAs every year, over the next 20 & 40 years respectively, that would result in a decent chunk of change for him to live off of.

                                BTW, i am assuming our family's average life expectancy of the early 80s and mid-80s for me & my spouse, respectively. IF we departed earlier, that seriously impact how much we leave him and how much longer whatever we leave needs do last him. So 7% over 40 years looks very attractive indeed, if you KWIM!

                                Comment

                                Working...
                                X