what are Bonds?
- Thread starter crc_error
- Start date
You work for them for twenty years, and when times get tough,
the CEO will give herself a 1000% payrise, and then fire your butt!!!!!
sorry..... just couldn't help myself
Government Bonds- Next to no risk at all.
Non-Government Bonds - Risk/return is determined/reflected in the credit rating of the issuer.
Also need to consider term to maturity. Longer term = Higher risk = higher yields (sometimes)
Fixed rate bonds > an increase in yields will cause a decrease in prices and vice versa.
Non-Government Bonds - Risk/return is determined/reflected in the credit rating of the issuer.
Also need to consider term to maturity. Longer term = Higher risk = higher yields (sometimes)
Fixed rate bonds > an increase in yields will cause a decrease in prices and vice versa.
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hi
depends the bonds
bank bonds are giving very good returns at the moment.
but it depends which ones and depending if you are then leveraging those bonds.
if you are leveraging bonds the risks are very high
as I call them blown up bank bonds and those can be 2 and 3 times a normal bond
and they are fun
depends the bonds
bank bonds are giving very good returns at the moment.
but it depends which ones and depending if you are then leveraging those bonds.
if you are leveraging bonds the risks are very high
as I call them blown up bank bonds and those can be 2 and 3 times a normal bond
and they are fun
Bonds are taken for granted as being zero risk....which is erroneous imho.
Bond risks:
- if you buy another country's bonds, there is the risk their currency is devalued against yours.
- there's risk of the country defaulting on paying you back, like Russia during the ruble crisis.
- for Australian bonds,
= higher inflation can eat away at interest and principal.
= the private sector can go into a depression and not afford to pay the govt the taxes it needs to repay bond interest and principal.....in which case the govt would
A: print more money and devalue the AUD further, causing more inflation.
B: issue more bonds and use the money from that to repay you (Ponzi Scheme).
Many people also don't get that there's a ceiling on how much money a country can borrow, or print. Obviously a country can't double the money circulating when productivity is only going up 5% pa.
However, Australia has for a few years increased money supply by 12-16% while GDP has been around a third of that. Maybe Mark_B who worked with the RBA can explain why.
The risk of buying bonds through a fund is that the fund manager tells you pork pies and siphons off your mulah into an account in the Carribean....and charges you a management fee for his effort.
Bond risks:
- if you buy another country's bonds, there is the risk their currency is devalued against yours.
- there's risk of the country defaulting on paying you back, like Russia during the ruble crisis.
- for Australian bonds,
= higher inflation can eat away at interest and principal.
= the private sector can go into a depression and not afford to pay the govt the taxes it needs to repay bond interest and principal.....in which case the govt would
A: print more money and devalue the AUD further, causing more inflation.
B: issue more bonds and use the money from that to repay you (Ponzi Scheme).
Many people also don't get that there's a ceiling on how much money a country can borrow, or print. Obviously a country can't double the money circulating when productivity is only going up 5% pa.
However, Australia has for a few years increased money supply by 12-16% while GDP has been around a third of that. Maybe Mark_B who worked with the RBA can explain why.
The risk of buying bonds through a fund is that the fund manager tells you pork pies and siphons off your mulah into an account in the Carribean....and charges you a management fee for his effort.
Crc, this may help:
http://www.asx.com.au/products/interest_rate_securities/index.htm
And
http://www.asx.com.au/asx/markets/displayInterestRateSecurities.do
for listed prices.
I strongly suggest reading the initial bond perspectus of the bond you are looking to buy.
http://www.asx.com.au/products/interest_rate_securities/index.htm
And
http://www.asx.com.au/asx/markets/displayInterestRateSecurities.do
for listed prices.
I strongly suggest reading the initial bond perspectus of the bond you are looking to buy.
hi crc_error
also you can't recommend a bond or sell it unless you have a licence to do so
minor issue.
for me I would look at a bank bond and a stapled unit also if looking.
you can buy bonds direct and is like a direct investing in shares so its is possible but you have to buy direct with the bank
or institution and that is a little difficult.
for buying bonds I would be very carefull as they ave to be an institution taht you think will be around long enough for the bond to last
I don't know of any that are backed by any government guarantee.
you don't hear alot about investing in bonds
as it can be a bit tricky but can be very good if you go for a long bond in a major bank
I am no expert in this field but singapore bond market from my last look was the best and they trade heaps there
also you can't recommend a bond or sell it unless you have a licence to do so
minor issue.
for me I would look at a bank bond and a stapled unit also if looking.
you can buy bonds direct and is like a direct investing in shares so its is possible but you have to buy direct with the bank
or institution and that is a little difficult.
for buying bonds I would be very carefull as they ave to be an institution taht you think will be around long enough for the bond to last
I don't know of any that are backed by any government guarantee.
you don't hear alot about investing in bonds
as it can be a bit tricky but can be very good if you go for a long bond in a major bank
I am no expert in this field but singapore bond market from my last look was the best and they trade heaps there
hi crc_error
who what and why would you use a balloon bond.
is simple if you have a magnified bond of say 3 to 1
you can show an income of the bond of 3 times the return or income
so if the normal income on a bond is say 10k an balloon bond shows a 30k income and because its in a bank bond then its bank backed income.
it give you low outlay for high paper income and shows healthy income.
this is the only reason for bond investment as I see it.
but this is using bonds as a form of investing and I do not recommend it
who what and why would you use a balloon bond.
is simple if you have a magnified bond of say 3 to 1
you can show an income of the bond of 3 times the return or income
so if the normal income on a bond is say 10k an balloon bond shows a 30k income and because its in a bank bond then its bank backed income.
it give you low outlay for high paper income and shows healthy income.
this is the only reason for bond investment as I see it.
but this is using bonds as a form of investing and I do not recommend it
Current CDS (credit default swap) indicates the default possibility for government bond:
* Australia government: 14%
* US government: 7%
Possibility of Australia default jumped drastically in the last week or so due to:
* rate cutting stopped.
* surprisingly big GDP contraction.
Australia has been often argued as one of 3-4 high possibilities of the next Iceland, which is now being reflected in overnight CDS internationally. When it comes, you won't see many signs before hand. It will come as a big bang.
If you have some references to the Aus is Ice comparison, I'd appreciate it. Haven't heard about the cds interpretation, though have heard Australia is a high risk due to the private debt to gdp ratio, heavy reliance on commodity exports to trading partners with falling gdp, banking sector with exposure to ongoing devalued assets, a public sector that has blown its surplus and now has to print and borrow.
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