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Bonds, the basics

Discussion in 'General Investing Discussion' started by Luke83, 2nd May, 2018.

  1. Luke83

    Luke83 Member

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    Does anyone hold bonds, where do you buy them and what are the pros and cons.
     
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  2. twisted strategies

    twisted strategies Well-Known Member

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    Introduction To Bonds

    Types Of Bonds

    please don't be shy seeking expert advice here .. this is an adult game

    i currently have only two interest-bearing securities ( both floating rate ) as i struggle to find attractive risk v. reward ratios

    ( both current equities bought before 2015 )

    please take care ....
     
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  3. Luke83

    Luke83 Member

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    So they are bought through the ASX like shares?

    I am assuming the Aust Government bonds are the SAFEST as far as Risk is concerned?
     
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  4. twisted strategies

    twisted strategies Well-Known Member

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    they can be if you can find a seller

    the problem that way is to get the price and quantity you would like

    for example

    GSBE19 = AUSTRALIAN GOVERNMENT TREASURY BONDS TREASURY BOND


    [​IMG] $103.49 -$0.286 (-0.3%)
    $102.00 $103.80 as at 3 May 11:45AM ET

    4.13% below 52 week high

    $103.24 Low $107.94 High

    is availalble on Bell Direct ( so i assume also on Commsec )

    but has only 2 buyers and one seller ( @ $103.80 for a max of 65 units)

    some of these beasties don't trade on market for months

    so please make sure you REALLY want to buy what you are chasing
     
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  5. Financial Advisors AU

    Financial Advisors AU New Member

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    Thanks for the information!
     
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  6. Sam Edwards

    Sam Edwards New Member

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    Buying bonds seems fairly straight forward, but when a bond reaches maturity do the shares automatically get sold off and funds returned to your trading account?
     
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  7. twisted strategies

    twisted strategies Well-Known Member

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    to your nominated bank account ( for me ) , i have a saver account that actually pays interest on reasonable monthly balances ( under $5000 , unlike the trading platform linked account which desires a large slab of cash befored paying interest .)

    ALSO some will offering a 'roll-over '' alternative to a new bond ( or note )
     
  8. Sach

    Sach New Member

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    Can anyone comment on buying bonds vs buying a bonds ETF? I am currently considering Vanguard's VGB fund to sit the money I want in bonds.
     
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  9. twisted strategies

    twisted strategies Well-Known Member

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    please note i am NOT a financial advisor ( or industry professional )

    but i have bought into corporate bonds ( and other corporate debt ) in the past ( i don't currently hold any )

    these opinions are strictly personal

    to me bond purchases are a serious business , you are expected to be a sophisticated investor ( well educated , and well informed ) and thus understand the risks involved

    each bond offering is an individual beast

    personally i avoid ETFs that bundle bonds as you place too much trust on the fund manager and you can not assess the various bonds in the basket nor guess future additions to that basket ( your fund manager may increase the risk factor when you may rather they hadn't , or vice versa )

    i hold two Vanguard products and am quite happy with them ( they are share/index focused )

    regarding government bonds ( specifically ) i would go to Greece and Cyprus and study what was officially endorsed when those governments got into financial discomfort
     
  10. Sach

    Sach New Member

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    Thanks for your reply. The fund I mentioned is
    -Vanguard Australian Inflation-Linked Bond Index Fund

    So my presumption there would be the fund only consists of Australian Government bonds. IS there something I am missing? There was a comment above saying individual bonds can be hard to sell due to not much activity. I wonder if this would alleviate that to some degree?
     
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  11. twisted strategies

    twisted strategies Well-Known Member

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    Federal Government or State bonds ( or a combination of both ) , long term bonds or short term ( or a mixture ) fixed interest or floating rate interest ( or a mixture )

    this can be very complex especially when you start adding in your personal needs

    ETFs have one major upside .. they ( NORMALLY ) offer a quick easy exit ( but maybe not at a profit )

    normally i do not sell bonds , i let the lender redeem them ( or let them mature )

    i buy bonds for ( reasonably ) reliable income ( and less focus on profit at the exit ) tor a certain time ( think of them as similar to a term deposit at a bank )

    since i don't intend to sell early , i put a fair amount of thought on what i am buying into , first ( and let the borrower make the decisions regarding repaying the bond )

    now Vanguard ( and their rivals ) offer an easy entry to be sure BUT you are putting a lot of trust in your fund manager to make wise choices ( that will suit you , personally )

    cheers and good luck
     
  12. jack

    jack New Member

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    Bonds are generally referred to as sovereign bonds/ debt securities that are issued by a Government and that help investors get interest.
    Read this post: Bonds?
     
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