Corporate Bonds

With rising costs and increased learning needs, financing our children's education is no longer a simple walk in the park. Discuss with other parents about how they are managing their finances to cope with their expenses.

Corporate Bonds

Postby zbear » Fri Jun 24, 2016 3:10 pm

I like to know more about Corporate Bonds n hope that those who are knowledgeable can share.

Are they high risk? I was told that they are safe n gives high yields. They are good for short term n has liquidity. Is it true? The only risk if the company goes bust but if you buy blue chip company, it shld be safe?

Thanks.

zbear
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Re: Corporate Bonds

Postby starlight1968sg » Fri Jun 24, 2016 4:18 pm

There is no safe yet high yield things. High yield likely to come with high risk.
The challenge is understand one's risk appetite and then find instruments that can match your appetite
As said, always invest with the money u can afford to lose and if anything happens, you can still remain ok
I do apply ipo of some shares & bonds, noting there is risk not to see the money invested

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Re: Corporate Bonds

Postby needtoupdate » Mon Jun 27, 2016 11:23 pm

Besides https://www.bondsupermart.com/main/home
any other website for reference?

How do we find out the liquidity of the bond or how do we find out the top volume of the traded bonds?
Any advice on which bank/finance vendor to use for low tranactions fees?

needtoupdate
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Re: Corporate Bonds

Postby starlight1968sg » Tue Jun 28, 2016 6:13 am

I dont buy to sell bonds. I keep them till maturity for their coupons. I try to diversify the types of bonds i buy

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Re: Corporate Bonds

Postby TheAnswer » Fri Jul 15, 2016 8:11 am

zbear wrote:I like to know more about Corporate Bonds n hope that those who are knowledgeable can share.

Are they high risk? I was told that they are safe n gives high yields. They are good for short term n has liquidity. Is it true? The only risk if the company goes bust but if you buy blue chip company, it shld be safe?

Thanks.

They are not high risk. Short term or not depends on the bond itself. You are also free to sell it anytime u wish at market price.
In the current market, value of corporate bonds are rising due to market uncertainty.

So far in history, I dun think any blue chip company did not manage to redeem its corporate bonds. Buy those companies that u r familiar with and please study their financial statements also.

In the event of company collapse, corporate bond holders are among the first in line to be paid. To me, almost zero risk. Just choose the right company to buy.

The amount each corporate bond requires is huge so think twice before throwing in retirement funds especially if that is the only sum u have. Most ppl either keep their corporate bonds till maturity or at least a few years.

Go for leverage if u can. In that way, the same amount of money can get u 2 corporate bonds.

TheAnswer
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Re: Corporate Bonds

Postby zbear » Fri Jul 15, 2016 8:22 am

TheAnswer wrote:
zbear wrote:I like to know more about Corporate Bonds n hope that those who are knowledgeable can share.

Are they high risk? I was told that they are safe n gives high yields. They are good for short term n has liquidity. Is it true? The only risk if the company goes bust but if you buy blue chip company, it shld be safe?

Thanks.

They are not high risk. Short term or not depends on the bond itself. You are also free to sell it anytime u wish at market price.
In the current market, value of corporate bonds are rising due to market uncertainty.

So far in history, I dun think any blue chip company did not manage to redeem its corporate bonds. Buy those companies that u r familiar with and please study their financial statements also.

In the event of company collapse, corporate bond holders are among the first in line to be paid. To me, almost zero risk. Just choose the right company to buy.

The amount each corporate bond requires is huge so think twice before throwing in retirement funds especially if that is the only sum u have. Most ppl either keep their corporate bonds till maturity or at least a few years.

Go for leverage if u can. In that way, the same amount of money can get u 2 corporate bonds.




:thankyou:


Thanks TA for sharing. It's very informative. My RM kept recommending me to go for corporate bonds becos they give higher yields.

What does leverage means? Pls explain - I am totally suaku. :oops:

zbear
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Re: Corporate Bonds

Postby hquek » Fri Jul 15, 2016 8:31 am

eh, I won't say that it's corporate bonds are low risk. No one ever anticipated that Lehman Brothers will go under - but it did. There is an order of payment in event of company going under. Also, the amount you get back and WHEN you get back may be affected by the circumstance. If one has holding power and doesn't need the money, fine and good. If one needs money desperately, then be aware.

This is a general guide: (http://www.investopedia.com/ask/answers/09/corporate-liquidation-unpaid-taxes-wages.asp)

Pls know the type of bonds you are buying - secured/unsecured, tenure, company financial strength/outlook etc. Interest rates are directly related to risk.

hquek
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Re: Corporate Bonds

Postby slmkhoo » Fri Jul 15, 2016 8:32 am

zbear wrote:I like to know more about Corporate Bonds n hope that those who are knowledgeable can share.

Are they high risk? I was told that they are safe n gives high yields. They are good for short term n has liquidity. Is it true? The only risk if the company goes bust but if you buy blue chip company, it shld be safe?

Thanks.

I don't know a lot as my husband deals with our investments. But I have heard that you can't count on being able to sell them as and when you like at a good price. The market may not be liquid at the time you wish to sell, or the price may not be what you want. However, if you select reputable companies and are happy with the returns, just be prepared to hold them until maturity.

As other have said, higher interest rates will indicate higher risk, so be careful when you select bonds. Also, no matter how "safe", the future is not always predictable, so don't invest amounts that you can't afford to write off, especially if the risk is higher.

slmkhoo
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Re: Corporate Bonds

Postby TheAnswer » Fri Jul 15, 2016 8:38 am

Leverage means taking a loan from the bank. Loan will be available to people who either have 2 million individual net worth or $300K annual income.

Let's say your corporate bond is 6% interest. Bank take 2% u take 4%.. but u need to come up with 50% to 60% of capital.

I m not sure if everyone is on the same page cos corporate bond is different from a normal bond. Market conditions do not fluctuate corporate bonds much. In fact it is a safer option. From what I can see from my portfolio. It has been rising since Brexit..

Like I say, if it is your retirement fund, make sure u do lots of homework yourself..

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Re: Corporate Bonds

Postby TheAnswer » Fri Jul 15, 2016 8:41 am

Fyi, if it is a corporate bond, bank only let u leverage not just because they value you as a customer but also faith in that bond itself..

Do more homework. Dun depend on our opinions, our risk appetite is different.

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