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Investing/Strategies / Bonds & Fixed Income Investments
|Subject: Re: bonds, are they safe?||Date: 7/16/2013 7:20 PM|
|Author: aj485||Number: 35012 of 35505|
seems like they never go down much. Some down and then right back up.
Well, you must not be checking the ones that go into bankruptcy or the company otherwise implodes.
Yes, for years we have been in a declining, or flat, interest rate market. As interest rates decline, bond prices increase.
As to whether bonds are 'safe' - you need to decide that on each individual issue you purchase, based on the underlying fundementals of the company, and the terms of the debt compared what your goal is for the investment. If you plan to hold a bond to maturity, and you feel comfortable that the company will be able to pay the interest until maturity, and then pay the bond off at maturity, then price fluctations of the bond prior to maturity are of little concern to you. If you are buying as an investment that you plan to sell, then you may be more concerned about what's going to happen to the price of the bond, and would probably need to take macro effects into account as well as individual company concerns.
I will say, in general, with all the talk of potential rate increases, buying bonds as a 'safe' investment now because you think they won't be decreasing in price is likely to be a foolish, not Foolish, move.
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