The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Bonds & Fixed Income Investments


Subject:  Re: $950K ... now what? Date:  1/15/2013  11:10 AM
Author:  rubberthinking Number:  34676 of 36670

That would have been relatively easy before the banksters took down the world. Now, not so easy.


not so fast. If you invested in late 1999 you'd be a lot closer to broke.

You might want to invest at the lows and sell at the tops. Bonds are more than likely topping out now. And a hold to 2019 will definitely be past the top.

Lets say for the sake of argument a couple with a million dollars invests it into the bond market today. They buy 30 year treasuries. The couple's age for the sake of argument is 65 years old each. They plan to hold the bonds for the thirty years into maturity.

What will happen? Yields will rise. And inflation will rise. So each coupon will become worth less and less. And the premium will disappear. And if sold in an emergency before maturity the bonds will be discounted. In other words to discount a bond is to sell it for less than it was bought for or below the face value.

Any trading of bonds.....note I did not say any bond trader.....can face death from here of a thousand cuts.....or a large loss a several years out from discounting and inflation......

never mind the coupons being tiny and taxed.

Copyright 1996-2019 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us