Corporate bonds

[sidicks]

Taxman10 said:

Apologies I probably wasnt clear - the bonds I have are "short term" between 3 and 5 years. They are property backed and pay interest quarterly and obviously the principal back at the end of the term - they arent publicly traded. Given they are property backed it feels unlikely that the principal wouldnt get paid in full at the end of the term.

to be able to invest you need to be a HNW individual and minimum investment tends to be between 10 and 50k

[Russwhitehouse]

sidicks said:

Taxman10 said:

Apologies I probably wasnt clear - the bonds I have are "short term" between 3 and 5 years. They are property backed and pay interest quarterly and obviously the principal back at the end of the term - they arent publicly traded. Given they are property backed it feels unlikely that the principal wouldnt get paid in full at the end of the term.

to be able to invest you need to be a HNW individual and minimum investment tends to be between 10 and 50k

This sounds like the kind of thing I had in mind. Are you able to divulge a little more as to who you are with? A PM if further discretion required?

[Jon39]

As already emphasised, the downsides for bonds and gilts (government stock), are rising interest rates and monetary inflation.
Even holding continously from issue to maturity (avoiding the effects of interest rate changes), inflation could have a significant effect on the investment. During periods of increasing inflation, businesses can react by increasing prices if appropriate, whereas a bond contract has fixed terms throughout, effectively I suppose a cash equivalent.

Businesses raise working capital by issuing bonds, with the intention of being able to achieve further business growth, for the benefit of the equity shareholder investors.

Regarding inflation, the government prefer to use the CPI measure, unless collecting money, when sometimes the RPI measure is still used! I do not have the exact recent figures to hand, but 12 month CPI is now about 3%, however RPI is about 4%. A significant 33% higher.

Edited by Jon39 on Thursday 11th January 17:56

[Badda]

Jon39 said:

Even holding continously from issue to maturity (avoiding the effects of interest rate changes), inflation could have a significant effect on the investment.

Edited by Jon39 on Thursday 11th January 17:56

I think everyone probably understands that and would be keen to invest in a bond with a yield higher than the rate of inflation. Could you explain how this could be any different to any other fixed income investment?

[LeoSayer]

Russwhitehouse said:

I'm looking for a hands off passive income payable quarterly or six monthly which on the face of it, this could provide. Opinions anyone?

You don't only need fixed income for income - there's plenty of income funds out there in different asset types.

[Jon39]

Badda said:

I think everyone probably understands that and would be keen to invest in a bond with a yield higher than the rate of inflation. Could you explain how this could be any different to any other fixed income investment?

I used bonds a long time ago, when it was fairly clear that inflation would probably reduce from very high levels. It worked out well at that time, with the inverse movement of the capital value, but I have never spotted those same circumstances since then.

There used to be inflation linked bonds (government stock). Are they still available to either citizens, or institutions?

A very knowledgeable well known American gentleman, has a much better way with words than me, to answer your inflation related question.

"Today people who hold cash equivalents feel comfortable. They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value."

[sidicks]

Jon39 said:

I used bonds a long time ago, when it was fairly clear that inflation would probably reduce from very high levels. It worked out well at that time, with the inverse movement of the capital value, but I have never spotted those same circumstances since then.

There used to be inflation linked bonds (government stock). Are they still available to either citizens, or institutions?

A very knowledgeable well known American gentleman, has a much better way with words than me, to answer your inflation related question.

"Today people who hold cash equivalents feel comfortable. They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value."

Real yields on long-dated IL Gilts are around -1.5% to -2%.

Edited by sidicks on Friday 12th January 17:32

[Taxman10]

Russwhitehouse said:

sidicks said:

Taxman10 said:

Apologies I probably wasnt clear - the bonds I have are "short term" between 3 and 5 years. They are property backed and pay interest quarterly and obviously the principal back at the end of the term - they arent publicly traded. Given they are property backed it feels unlikely that the principal wouldnt get paid in full at the end of the term.

to be able to invest you need to be a HNW individual and minimum investment tends to be between 10 and 50k

This sounds like the kind of thing I had in mind. Are you able to divulge a little more as to who you are with? A PM if further discretion required?

sure - Im not with these guys but this is a link to one of them

http://www.gcimarkets.co.uk/dolphin-trust/