Ask MetaFilter questions tagged with bonds

Ghost-ridin' da bond market

Mountain Goatse — Fri, 19 Jun 2009 10:31:55 -0800

City of Oakland, California, municipal bonds. How can I buy them? Good/bad idea? Will I be able to ride my scraper down to City Hall and purchase these, or will they be available only through brokerages? What will be the denominations?

I don't use a brokerage, and don't know much about bond investing, but I'd like to support my town with a little gouda. Good idea, or am I thizzin'? Any advice and/or experiences with local muni bonds are very welcome!

Thanks!

How should I invest in mutual funds?

stevechemist — Wed, 13 May 2009 11:20:30 -0800

For investing small amounts every month, is a S&P 500 index fund or a tax-free bond fund more beneficial? I know you are not my financial advisor, but I currently have about $200 in SWPIX, a S&P 500 Index fund. I've been doing some research, and found SWNTX, a tax-free bond fund that seems to be doing well (and have a good history). For small amounts of money (what I currently have plus adding an additional $20-40/month) would it be beneficial for me to split between the two funds, move completely to the bond fund, or to stay in the S&P 500? My goal is long term growth.

How risky are bond mutual funds?

david1230 — Sun, 10 May 2009 03:03:21 -0800

How risky are bond mutual funds? Help me understand the risk of bond mutual funds. Is a fund like VBMFX a good place to put some money for 1-2 years? How likely is this sort of fund to lose money during those two years? What general economic conditions affect the performance of bond funds?

Fire-and-Forget Investment Advice

anotherpanacea — Thu, 26 Mar 2009 05:34:24 -0800

Seeking fire-and-forget asset class investment advice for retirement: TIPS? Global Equities Index/Wilshire 5000? I know this is mildly controversial, but it seems like the 'common sense' approach has changed lately from "stocks for the long run" to "risk = loss." See especially here. My wife and I are about 35-40 years from retirement. My wife may retire earlier (25-30 years) if she can get away with it. We're both professionals who would like to minimize our attention to the markets so we can focus on our careers.

1. We can and will hire an investment advisor: this question is research for that meeting.
2. I'm currently feeling less secure in stocks as an asset class than I did five years ago. Even if this was a market bottom, I'm worried that stocks may not do so well in the middle-to-long term after all this deprecation of the asset class and the US's newfound skepticism of Wall Street. I don't mind volatility, but the bond/stock return on investment profile seems to be different than it was for the last 50 years.
3. I've been thinking a little about Zvi Bodie's Worry-Free Investment advice. (Treasury Inflation Protected Securities plus Social Security to protect standard of living.) It feels horribly pessimistic, but maybe that's the right way to be about retirement? Also, I worry that Social Security may be risky as well. Hell, saving for retirement assumes we're not going to die of cancer or in a plane crash, right? Shouldn't it be a little optimistic?

Neither a borrower nor a lender be...

[ixia] — Thu, 05 Feb 2009 23:13:03 -0800

Speak to me of deficits. If a country goes into deficit by selling bonds to other countries' foreign banks, is that debt ever used as a geopolitical bargaining chip? Why/why not? For example, say China and the US had some kind of diplomatic squabble: couldn't China just wave a hand at its giant pile of US treasury bonds and say, "Hmm. So you don't want us building a new military base in the Pacific, huh? You sure? Huh. Guess we'll have to start recalling that $681 billion you owe us- Oh, what's that...you changed your mind?"

I'm not specifically concerned about the above situation, in fact I'm sure it's extremely unlikely, not least because of the US's military power. I'm just curious about why, when so much of geopolitics depends on the complex power ratios between state actors, foreign debt is rarely mentioned as part of the equation. Will the GFC change that? Or have I missed something?

Enlighten me, hive mind.

Help with Money

CollectiveMind — Sun, 12 Oct 2008 11:00:29 -0800

Two years ago, when the DJIA was at 11,200, I thought the market was approaching its peak, and I moved money from an index stock fund to government bonds. For the next two years, I kicked myself as the market hit 14,000. Now, the market is full 600 points below its peak and 300 points below when I bailed. I'm wondering if I should believe the market has hit its bottom and go back to stocks. I realize it's the same concern in reverse and either way, I may lose by going back too early or too late. But, based on what is known so far, what do you think?

Questions about a Bond investment. (And did I get screwed?)

kamelhoecker — Sat, 13 Sep 2008 13:55:02 -0800

In June 2007, I bought a 5-year bond with a 6.5% coupon on the day it was issued. I understand how bond prices rise and fall, generally as a result of interest rates and confidence that the bond issuer will be able to repay the debt. However, I have a few nagging questions about this investment... I paid $100 per unit, but on the first day, it traded around $96. A month later it peaked at around $99, and since then the price has slowly sunk and is currently valued at $83.99

My questions:

1. Is there an advantage to buying a bond at the time of issue vs buying it on the open market? Wouldn't seeing some history of the bond price be a huge advantage? Why get in early?

2. Why did the bond lose 5% of it's value essentially instantly?

3. How can I pay $100 for a bond, but historical price charts do not show that $100 was reached?

I have asked some of these questions to the people who sold me the bond, but I wasn't happy with the answers. This same investment company also sold asset-backed commercial paper to ultra-conservative investors and told them it was as safe as a GIC. (Whoops!) So, I'm looking for more details and information before following up with them.

Where do you put money for baby?

ND¢ — Mon, 28 Jul 2008 08:04:05 -0800

So, we just had a baby and grandmothers keep coming up to us and handing us checks for $50 and saying "This is so you can buy a savings bond for the baby." However, I would like to hear about alternative saving/investing ideas for my daughter. I know 529s are the hot new thing, but I hate that it can only be used for college. What if she decides not to go to college or needs the money sooner for whatever reason? Is there a good way to invest the money that keeps it in our name until a certain date and then it goes to her and has more flexibility than a 529? I am not sure that tax liability is a major concern since we are talking about like $400 right now, but we would like to set aside a regular amount ourselves and there will be birthday gifts and whatnot to add to it.

Having reviewed the older questions on this topic, I feel compelled to list some advice I am not looking for: "buy gold because the grid is coming down man!", "my parents didn't give me any money and I turned out fine so your baby don't need none either", "don't ask people on the internet, go see a financial planner right now" and generally anything crazy.

Also, I can be convinced that a 529 would be the best way to go, but I would probably need state specific information. We are in South Carolina.

Thanks in advance everybody!

Why invest in treasuries?

justkevin — Wed, 25 Jun 2008 09:21:57 -0800

What's the advantage of treasuries over savings accounts? A majority of my money is in the market, mostly index funds. I have some cash reserves as well (probably higher % than experts recommend for my age, but I'm overly cautious) currently sitting in a savings account.

Savings accounts currently pay 3-4%, but the yield on short term treasuries (under 5 years) currently seems to be below 2%. Even a 10-year note is only a slightly better investment, and that's assuming interest rates don't rise. Is there an advantage to treasuries that I'm missing?

Is an index fund really a pot of gold at the end of the rainbow?

reenum — Wed, 18 Jun 2008 07:34:08 -0800

InvestingFilter: Is there anything inherently flawed about investing in index funds? I recently opened up a Roth IRA, and have invested in an S&P 500 Index Fund. I'll also be investing in a bond index soon.

I've been reading articles online and books such as 'The Lazy Person's Guide To Investing' by Paul Farrell. These books make it seem that investing in anything but index funds sets you up for a loss long term.

In my opinion, I'm a passive investor. I don't have the inclination to try and pick hot stocks. I'm fine getting a market average return. Farrell's book and some other sources such David Swenson make it seem that investing in anything but an index fund is lunacy. They harp on about load funds and how actively managed funds always underperform the market.

My question is: What's the catch about investing in index funds? It seems to good to be true. You keep putting money in and 30 years later, a nice pile is waiting for your retirement.

Some input from the more financial minded members of the Hive Mind would be much appreciated.

Trying to Buy Low so I can Sell High

SlyBevel — Mon, 12 May 2008 20:17:21 -0800

Please to give ideas on depressed stocks/funds/securities to put some money into during the downturn. I have a new job! For the first time in a long time, I'm going to get to aggressively pay down my debt, and I've also budgeted a hefty percentage for savings.

With the world of finance what it is right now, it seems like there should be something out there that's seriously devalued but relatively safe that I can put some money into. I'd rather not invest in a company like Countrywide, which is suffering due to its own stupidity, but rather one that's hurting mostly because there's plenty of hurt to go around these days.

I'm not looking to turn $100 into a million in six months, or anything so silly. I'm fine with putting money somewhere and letting it sit for five years or more. I'd just like to strike while this iron is hot and maximize my chances of growing what money I can put away.

I'm not in stocks, but I've been interested in them for a long time. I'd be fine with opening an Etrade account to buy them with.

I don't want something that will need a lot of babysitting. I know people who play the options markets, and it just seems like way too much work.

Suggestions and Reasoning please?

(For the sake of brevity, let's just assume YANMIA {You Are Not My Investment Advisor})

Should I renew my Barron's subscription?

beagle — Wed, 07 May 2008 13:16:28 -0800

Please suggest publications or online resources you like for the purpose of monitoring the direction of financial markets. I like to know which way the financial winds are blowing, for various reasons including adjustments to my 401K asset allocations (in smallish, conservative steps, nothing rash). I've been subscribing to Barron's for a few years and find it a decent guide to what's going on in financial markets.

However, before I renew (it's pricey: $179 for 52 issues) -- which other financial publications or online resources do you recommend? (Again, specifically to monitor the drift of how various investment options are performing, and where they might be headed in the months ahead.)

original cost/adjusted basis for a bond

zeek321 — Fri, 11 Apr 2008 04:24:00 -0800

Strips-Tint-US Treasury (bonds)... I need to know the original cost/adjusted basis for reference number: XXXXXXXXX and XXXXXXXXX. What is my tax person asking? How do I get this info? Google has failed me.

Help me understand US Treasury securities.

Flunkie — Fri, 04 Apr 2008 22:18:56 -0800

Help me understand US Treasury securities. I've invested in the stock market for quite some time. I've recently decided that I want to also invest some money in less risky securities, such as those offered by the US Treasury. I've been investigating, but there are still questions that I haven't found answers for.

Question 1. Is the only real difference between "treasury bills", "treasury notes", and "treasury bonds" the length of time until they mature? I understand that their price and interest rates will differ as well, but that obviously depends on the maturity length. So I guess I mean something along these lines: If the Treasury started offering "30 year treasury notes", under exactly the same rules as their current treasury notes except that they have a 30 year maturity, should an intelligent market value them exactly the same as it would "30 year treasury bonds" offered at exactly the same time?

Question 2. Let's say I use TreasuryDirect.gov (which seems like a good idea). How is periodic interest paid out? I don't mean "when" or "how often"; rather, I mean for example "Does it automatically get plopped back into the bank account that I linked to my TreasuryDirect account?"

Question 3. I use Quicken. Investigation reveals a profound lack of information on how to deal with this stuff in Quicken, but seems to indicate that it can't automatically track your US Treasury securities' values like it can your stocks' values. But this is almost unbelievable. So, my question is: Seriously? Quicken can't deal with United States Treasury securities, except manually? And if the answer is "Yes, seriously", then a followup: How do you personally deal with this?

Question 4. I gather that these things are only sold on very specific days. Do I have to log on to Treasury Direct that day, between some hour and some other, and tell it "Hey, I want some of that"? Or can I just tell it in advance that I want to buy such-and-such an amount of security such-and-such, at the noncompetitive price, whenever it becomes available? If the latter, how far in advance can I do so?

Any other hints that you think might be helpful would also be appreciated. Thanks in advance.

Should I Help Bail My Nearly Homeless Neighbor

eedele — Tue, 22 Jan 2008 11:01:51 -0800

My neighbor's husband is currently holed up at Riker's while his people are scraping bail money together... She's almost there and they both have asked me to cosign the bail bond or whatever it is... I am stupefied by this... These folks are as ignorant as they are poor. I assume they have no one else to ask so that it maybe dependent on me to get this guy out of the clink... what are the legal ramifications, liabilities etc of signing this document?

Where to buy models of molecules?

Chanther — Mon, 07 Jan 2008 13:55:45 -0800

What is a bricks-and-mortar store at which I could buy a set of model elements / bonds - the molecule model things that students use as they are learning organic chemistry? I unexpectedly need a model to teach bonds in organic chemistry, and I need it too soon for online shipping to get here. I'm looking for the kind of model elements and bonds (the little black carbons that snap into the little white hydrogens, etc) that students usually use as they're learning chemistry / organic chemistry.

I'm in the St. Louis area, if there are stores you know specific to that area. But I'm perfectly happy with chain stores that I'd find in malls, etc. Thanks for helping a teacher out!

how do I short sell a bond?

amsterdam63 — Wed, 05 Dec 2007 13:19:14 -0800

Can I short sell a bond? If so, how do I go about it, meaning what kind of broker do I need to have? I have an E-Trade account, and I asked them if I could do it through them and they said no. Please let me know.

How can you maintain your NASD licenses once leaving your firm?

lawstudent09 — Sat, 06 Oct 2007 09:55:34 -0800

NASD licenses (specifically series 7 & 63) requires company sponsorship to obtain. Once obtained, you need company sponsorship to maintain the licenses. Is there a company who will maintain your licenses for you while you are not working in the financial industry? Perhaps for a fee on top of the annual registration costs? I believe you have two years from separation with your employer to obtain a new sponsor.

Don't cry for me, just help me write about Argentine bond trading

np312 — Wed, 03 Oct 2007 19:43:25 -0800

Does this (fictional) international finance scenario I'm writing make sense? If not, how can I tweak it so it's more accurate? (Bond traders, investment bankers, or economy-buffs, feel free to chip in!) I have a very limited understanding of global business finance but need to have a minor part of a story I'm working on involve an element of this. (see related question)

So I've figured out that the character is a managing director of emerging markets for a JP Morgan-type multinational firm. In this particular scenario, (which takes place a couple months before Argentina's 2001 economic crisis,) she has to convince an Argentine businessman or government official (not sure what his title would be, feel free to chip in) to allow her American JP Morgan-ish firm to broker the sale of Argentinean securities and/or bonds. Yet when their economy falls apart, she loses her deal and/or gets shafted because no one wants to do business with Argentina anymore by that point in their crisis.

Um... yeah. I have no idea whether this is a plausible scenario. Help me make it plausible, please! Details are good! Many thanks.

Very Specific Character's Job Title?

np312 — Fri, 14 Sep 2007 17:53:46 -0800

Help me ascertain the correct job title for a character I’m writing who deals in high stakes international finance. Difficulty level: I have a limited understanding about stocks, bonds, or securities. Hi there—now there are several plot points that can’t be changed that I must work around, so it would be a great help to find a job title/description for this character that fits the following constraints.

The character I’m writing needs to be a high-paid person in finances, the type who might get sent down to Argentina in the months immediately preceding the 2001 Corallito/2002 Bankruptcy in order to broker some sort of high-stakes financial deal involving a US firm (hers) and an Argentine company of some sort.

Here’s the most important part: she’s trying to get these Argentinean businessmen to come on board with her JP Morgan-ish company in some way (invest abroad? Partner up for some reason?) and they are all set to do so –until- the country’s fiscal crisis spirals out of control in the fall of 2001, and she loses the contract/client because of it.

Some job titles that seem to fit are Emerging Markets Bond Trader or Financial Analyst, but I’m still a bit unsure of what those jobs actually entail. So! Any ideas of what this character’s job is and what kind of financial deal is she could be responsible for in this particular situation?

Thank you for all help/ideas!

How best to invest money for my kids

mcstayinskool — Thu, 24 May 2007 15:50:23 -0800

My daughters regularly get US Savings Bonds from relatives as presents. Can I do better for them? My young daughters (ages 1 and 3) receive U.S. Saving Bonds (Series EE "Patriot" Bonds) periodically from relatives. They have a 30 year maturation and I feel I can do A LOT better investing this money than in U.S. Bonds. I also am not fond of having to squirrel away these pieces of paper, as I'm convinced I'm going to misplace one or many of them.

My question is: what should I do? This is their money, not mine, but I want it to grow at a reasonable rate. I expect they will be pulling this money out when they hit college age, whether they choose to go that route or not. So, we're talking about a 15-17 year investment window. We're talking about ~$1K in bonds, which (I think) are worth much less when cashed out, maybe half that. There will be more bonds coming though, and I'm thinking I'll start contributing monthly as well to whatever route I decide to go.

FWIW, the relative would never know these are being reinvested. I think it's very kind that they think of my girls on their birthdays, and I mean them no disrespect. I just think US Savings Bonds are ridiculously conservative for this type of investment.

Could I screw myself with my own money?

josingsinthehall — Tue, 28 Nov 2006 16:19:15 -0800

I've got $20,000 coming to me, and this may possibly be a bad thing. Mature Bonds vs. Charity filter... I currently receive medication every few weeks through an IV. This lovely, lifesaving drug is a couple of grand a pop. I would never be able to afford it, even the lower copay through my insurance, except that the clinic I where I get it gives it to me for free and takes it as a tax write-off.

I have a $20,000 bond that just matured. I'd like to cash it, use about 4 grand to pay remaining student loan and credit card debt, and put the rest back in CDs or somesuch thing.

Here's the question:

If I cash this bond, will it affect my status with the clinic? Could I lose my "charity" status?

Searching for low risk, high yield, low timeframe investments.

evadery — Thu, 21 Sep 2006 17:56:07 -0800

I'm trying to get some decent, low risk investment income in the short term, as I am in a state where I may need access to my funds as early as 6 months to a year from now. Where should I put my money? I'm a Canadian, so I've heard that PC Financial has a 4% yearly interest savings account (processed daily I think), which gives you free access to finances. I would be OK tying it up for up to a year, provided the yield would be better, though 6 months would be a bit more ideal. Any ideas for good places to put my funds with minimal risk?

Some side questions - what are the best long term bond rates available now? Do you know any good general websites that have high yield bonds listed?

Sorry if this is too similar to some other AskMeFi questions floating around...but my piggy bank thanks you.

Understanding US dollar denominated securities

ikkyu2 — Sun, 03 Sep 2006 18:17:31 -0800

Help me understand U.S. dollar-denominated foreign securities. I understand some reasons why one might want to invest in foreign instead of domestic securities- diversification, for one; and expectation of a weakening dollar, for another.

I also understand that if you buy the foreign securities in U.S. dollars, you're in a sense avoiding exposing yourself to unpredictable fluctuations in the foreign currencies; some currencies are much more volatile than the U.S. dollar.

But if you have an expectation of a weakening dollar, does it still make sense to invest in U.S. dollar-denominated securities? Does the fact that the foreign company is presumably transacting the majority of its business in the foreign currency make this type of investment a hedge against a weakening dollar? And finally, are the theoretical implications different for equity instruments than for financial instruments such as bonds (debt)?

The best answers will explicitly exclude investment advice. I do not require investment advice. This is just about understanding - I want theoretical perspectives on the answers to this question.

Savings bonds a loser?

turtle42 — Sat, 02 Sep 2006 18:43:47 -0800

Kids Savings bond (EE) question: If they are past their "hold" period, isn't it better to cash them in and put into their 529 fund where they are likely to earn better than 3-4%???