Is now a good time to be buying bonds? If so, could you please explain why.?

Answer 1

If you want some sense of financial security, bonds are less volatile and provide a steady flow of revenue. In the event of default, if a company were to fold, the bond holders get paid before stockholders see a penny of their equity (if any).

Bonds are not as easily traded, but there is some trading opportunity in that if you expect interest rates to rise, the prices for bonds will likely fall. This is to say, you can then buy them cheaper. Of course, if interest rates begin to decline, the price of bonds will rise and while your yield may fall, the principle on the debt will have risen.

Another complication is that when there is uncertainty in the economy, the price of bonds will rise when money flows away from stocks, but then falls when the general default risks grow.

Then there is the accounting for interest when you buy a bond at a premium. Bond prices are expressed in percentages of $1,000, the standard bond size (corporate, treasuries and municipals are different, 10k and 5k respectively are common for them). If you bought a bond at 110%, then you paid $1,100. When the bond matures, you only get $1,000-- plus the interest income stream in the meanwhile. You will need to keep record of the interest income in order to compensate your accounting for the eventual loss of principle, $100 in this case. If you bought the bonds at a discount, say 90%, then you paid $900 for a bond. Meanwhile, you will be paying tax on the passive income of your interest payment stream, but when the bond matures, you get $1,000 and the $100 over is a capital gain. The interest rate, whatever the published "yield" numbers change, is set, so that doesn't change. But the tax picture can get a tad bit more complicated than some are prepared for.

Is it a good time to buy bonds? Most times are, but the why of it is your real question. Bonds are a different animal. Think of stocks as dogs, and bonds as cats (or perhaps cows might be a better picture). If you are a speculator, then playing with a dog is different than playing with a cat or cow (you milk cows). Still, you can tease out some trading profits, say you bought the bonds when the company (a pharmeceutical during drug trials perhaps) had some questions about its future, but when the questions are resolved, the risk reduced, the bonds will likely sell for more, voila, a capital profit!

Answer 2

I'm sure that Ecko could care less what Barry says. In fact i'll bet he loves the attention that he's getting. It's a PR move by him. After the voting is over the only way he'll look like an idiot is if shooting it to outer space wins. He's not gonna do that.

Answer 3

if invest in the bonds in this generation inerest is ups and down so not better, if u to avoid from income tax. it is better to purchase bond papers only for income tax avoid.

Answer 4

Rabbits answer is pretty good!

Answer 5

current rates are low..........are you after return or security?