Tuesday, July 31, 2007

Invest in bonds now?

Dear Mr. Tan,

At present, I have stocks worth about S$200,000. As stock prices are high, I am considering to sell them and re-invest my money in another type of investment.

I understand that bonds are a good and safe investment. Do you agree? Is there any good bond investment that you can recommend? I want my money to work harder for me, as I am retired now.

REPLY:

I suggest that you read this FAQ. Although the points were written three months ago, they are still largely relevant today. I hope that you find them useful.
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3 comments:

Anonymous said...

bonds cannot work hard. it can only
protect.put in combined fund .

July 31, 2007 11:13 PM
Khiat Han Hwee Adrian said...

Most bonds are safe investments that gives attractive returns considering the very low risk involved.

However, note that Bonds are divided into different investment grades. The risk is high if you are investing into Junk Bonds or country bonds of lower credit ratings.

You can purchase SGS Bonds from online portal like Fundsupermart.
You can also purchase Unit Trusts that specialise in Bonds.

Just take note that not all bonds are low risk.

August 03, 2007 1:45 AM
Anonymous said...

The recently released result of the 2 year bond is only about 2.3%. The 20 year bond is about 3.5%. The 5 year bond is about 2.5%.
Attractive returns? Judge yourself. Do you want to put your money in these instruments.I bet many will say, PEANUTS!!!!!
The next question is who buys them then if they are not attractive.Remember the the sale of bond is by tender .The bidders decide the yield. The answer is the banks and insurance companies who are forced to buy them for hedging against their liabilities.
This tells why the par value of traditional insurance products have low guaranteed component and their total return is substantially driven by other investments( non-guaranteed).If it is powered by other investment (equities) does it not make sense to invest in equities or ILPS?

August 04, 2007 1:39 PM

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