Posted on 07/30/2009 2:09:26 PM PDT by sdw2009
Given the chance to make 30% in stocks or 25% in bonds (from the March lows), you ought to pick the bonds. Why? Two reasons...
(Excerpt) Read more at thedailycrux.com ...
Just last week I just put my investments in bonds. I had everything in cash and was hesitant even to do this. I wouldn’t go near stocks if you promised me 100% return.
What did you buy? I’m reluctant to put anything back into this economy. But CD rates are quite pitiful!
Missed warning about buying bonds below par value: You may have to pay tax on the difference. i.e. you buy a $100 bond for $50, you owe taxes on $50 unless you’re buying through your IRA. Also be careful on the “call date” and “maturity” to see when the bonds may be called back. Don’t forget the volume. Many bonds selling below par are also very illiquid and may be difficult to sell in a panic. You need to know what spreads/margin your brokerage takes on the bonds you purchase. Then you need to know the difference between corporate and government, then federal, state, and municipal bonds. Then you need to know the liquidation/payment order, whether or not they are cumulative, etc. Oh and changing interest rates can affect the value of your bonds (not liquidation but trading value).
Bonds are by no means easy or guaranteed and you need to speak to somebody you trust (who does not get paid by your investments) when investing in bonds.
In many ways, stocks are much easier to invest in. By the time you become a novice in bonds, you can be a veteran investing in stocks. There are great deals in bonds right now but it seems the pros are the ones selling those great deals. Heh.
You should never put all your money into any one vehicle, just like you should never put it just into a single stock. You should have a mix of stocks, bonds, cash, commodities, etc. I understand the fear of stocks, but go out and get some good investment advice. You’ll find that there are some stocks that hold on in the long run and even do well during hard times. People who get rich are the ones who jump in during bottoms. Warren Buffet always said, sell when people are greedy, buy when they panic.
With interest rates being low bonds are particularly vunerable. A 10 year bond paying 4% might go for close to par now, but if interest rates went to 8% the value of the bond would drop.
Saying the par value is “safe” is misleading.
I’ve been around he block a bit! I do have a financial advisor who has been with me for 12 years. I guess what I wrote was a bit misleading...I put a portion of my holdings in bonds...the point I was trying to make is that I’m staying away from stocks. It’s about comfort.
Fidelity bond funds.
Cool, I guess I misread it that you put everything you had into bonds..
No. Years ago my husband begged me to buy some gold. I don’t know why, but I just always shied away from it. What do you think about gold right now?
I’ve never liked Gold other than an insurance policy because there are too many people playing games with it and there have been way too many scams. I’ve always told people, if you want to buy Gold, either buy an ETF or buy a Gold Rolex (or other high-end recognized lux brand.) With the latter, even if the price of Gold drops, you have the value of the watch itself which historically, has held its value better than the metal. You have a double down on the investment value with it.
Except when BO comes along and tells you that you’re greedy for wanting 50 cents on your dollar and you should be happy with 5 cents on your dollar........
thanks, I’ll look into it.
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