Is now a good time to invest in bonds ? If not now then when is the best time to invest in the bond market?

Question

I am a novice investor and I do understand the inverted yield relationship however I am unsure when the best time is to invest in this area.

Answer 1

I do not believe this response is appropriate for a novice investor.
Given the geopolitical situation, I would recommend keeping your bond investments in the U.S. If you are wanting income from the bonds, buy U.S. Treasuries or broker C.D.'s. Never buy a bond mutual fund. If you intend to trade in bonds, I suggest you first become proficient - bond trading is more difficult than stock trading. Try the websites www.tradinginbonds.com and bankrate.com. Good luck.

Answer 2

I would say that now is the perfect time to invest in bonds- especially foreign bonds.
The US Dollar has been sliding against all the major currencies for years and will continue to do so for the next two years or so. That makes other money and the Treasury Certificates that those government sells more expensive relative to the dollar. That means that, as the dollar declines, the value of foreign bonds relative to the dollar will rise.
Be certain to invest in a country whose upside potential is going to be the greatest. The Euro has its own problems (hence the two-year forecast for the sliding dollar...) and Australia faces many of the same problems that the US economy does.
The country whose dollar has the highest upside potential relative to the US Dollar is absolutely, positively Canada. Buy Canadian bonds now and watch as they not only increase in value but their denomination against our currency also rises. So with that, you will get a nice fat two-fer.
Best of luck to you!

Answer 3

The best time to invest in bonds is when interest rates are high and falling. Right now, they are low and rising. So no, right now is not the best time to invest in bonds, with one exception: mortgage interest-only (IO) strips. Those tend to rise in price when interest rates rise. Also, you may consider investing in short-term bonds and hold them until maturity.