Fixed interest bonds

[Thundersports]

I have a sum of money to invest and have being toying with the idea of investing in Bonds. The interest rates seems very keen which has set alarm bells ringing. I'd appreciate the input and recommendations of the wise heads on the forum.

[Jon39]

Thundersports said:

I have a sum of money to invest and have being toying with the idea of investing in Bonds. The interest rates seems very keen which has set alarm bells ringing. I'd appreciate the input and recommendations of the wise heads on the forum.

The attractiveness of bonds is related to prevailing general interest rates.
Therefore, make sure that you understand the inverse aspect.
General interest rates rise, therefore bond capital values fall, and vice versa.

Your call on which way general interest rates might move.

If holding until maturity, then that aspect would not apply, but inflation then becomes the important point.
Also, when a bond (debt) is issued by a business, there can obviously be another risk to be aware of.

Edited by Jon39 on Wednesday 19th July 08:31

[drainbrain]

Against all advice from people who know better I have just bought into Dolphin Trust, so, obviously my input would be "do it" and recommend you research the underlying asset until you're comfortable that it's unlikely to go bust, because that's the core risk.

Edited by drainbrain on Wednesday 19th July 18:16

[DoubleSix]

drainbrain said:

Against all advice from people who know better I have just bought into Dolphin Trust.

For a second there I thought you were about rattle on about yourself again.





Oh wait...

[ellroy]

When you say bonds what do you actually mean? The term is used for a vast variety of differing investment medium/products.

Term accounts from Banks, are referred to as bonds.

Corporate and Government debt are bonds.

Then you've got offshore or onshore Investment Bonds, a wrapper to hold assets in short.

Which one are you talking about as they've all got their place potentially.

[Thundersports]

These are the sort I mean sorry I was a bit vague in my original post.
https://best-investment-rates.co.uk/v1?gclid=EAIaI...

[ellroy]

Those are debt, you're effectively acting as a lender to some small businesses, typically property developers in many cases. Do you understand the underlying holdings, the capital structure and your place in it in terms of getting repaid should it all go wrong?

Many of them are not covered by the FCA protections that would be in place for more main stream holdings.

I'd be wary of anything promising too much in terms of return in the current climate.

[DoubleSix]

Thundersports said:

These are the sort I mean sorry I was a bit vague in my original post.
https://best-investment-rates.co.uk/v1?gclid=EAIaI...

Jesus titty Christ

[drainbrain]

Thundersports said:

These are the sort I mean sorry I was a bit vague in my original post.
https://best-investment-rates.co.uk/v1?gclid=EAIaI...

If, after looking into it, you feel confident in these companies and in what they do with your money then it's something to put spare investment cash into.

Of course you could lose it. Or you could profit from it. No-one can tell you which for sure.

But, simply put, don't put anything into it that you're not prepared to lose.

IMO: The lower rate stuff is pretty safe. And the higher rate stuff is probably safe enough too.

But hey, it's your money.....

So get looking into all the data you can find on any of them that you fancy. You owe yourself that at least.

You could maybe start by asking the people who rubbish any specific offer what personal experience they're basing their shade on - or even ask them to point to some internet review or whatever that reinforces a negative opinion.....

Edited by drainbrain on Wednesday 19th July 23:08

[Thundersports]

Thank you for your replies. Plenty of sharks out there having done some research off the back of your posts. LCF look particularly iffy as my own research had revealed who are they lending to for them to give you a return of 8%!

[drainbrain]

Thundersports said:

Thank you for your replies. Plenty of sharks out there having done some research off the back of your posts. LCF look particularly iffy as my own research had revealed who are they lending to for them to give you a return of 8%!

I'd be interested to hear your post-research opinions of Zopa.....

[Thundersports]

drainbrain said:

I'd be interested to hear your post-research opinions of Zopa.....

I looked at that and it does appear to be fairly good.

[arguti]

DoubleSix said:

Thundersports said:

These are the sort I mean sorry I was a bit vague in my original post.
https://best-investment-rates.co.uk/v1?gclid=EAIaI...

Jesus titty Christ

that was my take on it; personally, if you are looking for that rate of return, i would prefer to money into royal Dutch Shell (RDSB) which is currently yielding around 7% and looks a little bit more secure!

[db10]

Clean energies bond is paying 9pc. Interest paid quarterly. You can't invest in it anymore though

[JulianPH]

Just a cautionary note on investing in bonds. There are many companies (not suggesting the ones in the link) that are issuing bonds at the moment that are complete scams.

They are heavily marketed to people (often as a SIPP investment) and some are paying up to 30% commission to the people selling them. They look respectful, but are not. If you get cold called about investing in a bond (or an investment portfolio that holds them) you can pretty much guarantee you are being scammed.

The FCA is on to these, but the sale gangs move pretty quickly. Avoid like the plague.

If you want to invest in this type of bond (which is effectively lending a company money) make sure it is from a strong company you know of.

[jeff m2]

If you want a obnd fund because you fear equity and risk.
Then you must go for a short term, possible medium, fund, this will reduce the yield price reaction (as rates rise)
These will of course offer lower yields.
If you go for a long fund fund your risk is probably higher than equity

Emerging market sovereign debt, many emerging countries are in better shape than the US and UK but still have to pay more for money.
Currently paying over 5%.
Every 10 years or so there is usually one default Greece Argentina Russia, but good fund managers can see these coming and reduce their funds exposure.

High yield, traditionally full of junk, has performed well, but now there are murmurs (in the US) of an increase in default of auto loans which fall into the bank loan or variable category which high yield embraced (chasing yield)

Never buy anything from an incoming sales call.

[KTF]

Thundersports said:

These are the sort I mean sorry I was a bit vague in my original post.
https://best-investment-rates.co.uk/v1?gclid=EAIaI...

Most of the ones on that list are p2p lenders.

[drainbrain]

Earlier this year Cashplus users had an opportunity to buy their 4 year 7% bond.

Wish I'd done it.

[JulianPH]

jeff m2 said:

Never buy anything from an incoming sales call.

That sums up what I was trying to say precisely

[Ginge R]

JulianPH said:

Just a cautionary note on investing in bonds. There are many companies (not suggesting the ones in the link) that are issuing bonds at the moment that are complete scams.

They are heavily marketed to people (often as a SIPP investment) and some are paying up to 30% commission to the people selling them. They look respectful, but are not. If you get cold called about investing in a bond (or an investment portfolio that holds them) you can pretty much guarantee you are being scammed.

The FCA is on to these, but the sale gangs move pretty quickly. Avoid like the plague.

If you want to invest in this type of bond (which is effectively lending a company money) make sure it is from a strong company you know of.

Wise words. No suggestion, of course, that this particular bond is one that Julian refers to, but his insightful counsel emphasises the importance of choosing a SIPP provider that researches diligently and doesn’t allow advisers to use it to flog any old rubbish.