General > General Technical Chat
Is it a good time now to get into bond funds?
paulca:
I do not know the details of how things may or may not work in your part of the world, but in the UK. A lot of pension providers will allow you to open an investments ISA (Tax free*) saving account alone side it, invested into the same fund. If your pension is doing okay, it's an option. There are other options around self-investment pensions with less severe restrictions on pulling it down early. T
If you are willing to wait on your money two approaches.
Put your savings into your pensions. In the UK you pay no tax on your pension contributions, they are "pre-tax" on the wage slip. You do get taxed on them when you draw on them as income. However the rate you pay now and the rate you pay then may not be the same. A lot of people I know have mentioned when they popped through the 40% bracket they asked for further raises to be deferred to their pension completely. Such that they do not pay any 40% band tax. As to raises, you have to wait on the Govt raising the 40% bar. You could have worse problems... at the other end of the spectrum.
Or a little more exotic. Defer your mortgage to interest only. Especially if the interest on your mortgage (or any loans) is sub-inflations. There are ways to make money from debt. In times of inflation, take the arm off interest free or low interest loans.
ISA savings you pay no tax on your capital gains. The money you put into the ISA has still been subject to income tax.
**Seek financial advice. The above is NOT financial advise and is mostly parroted off sites like MoneySavingsExpert.com**
Note. Deferring loans against inflation is "playing the darkside". It's basically short selling cash. It's about the only thing a normal individual consumer "can" short sell.
If you borrow cash now, such that it's worth less in real value when you have to return it (accounting for interest). That is a successfully in and out short position.
jpanhalt:
--- Quote from: engineheat on March 20, 2023, 07:45:26 pm ---Speaking of US government bonds, what do you think will happen to it if they don't raise the debt ceiling and Uncle Sam go into default? If someone has $100k in US Treasury bills, does it just go to zero?
--- End quote ---
The the US government defaults on its treasury bonds, money will also be worthless. Read what is written on every bill: "Federal Reserve Note." Silver certificates were destroyed a long time ago. One has to assume our military has contingency plans for that, but no one wants to talk about it.
SiliconWizard:
--- Quote from: jpanhalt on March 20, 2023, 11:36:59 am ---
--- Quote from: jonpaul on March 20, 2023, 11:18:24 am ---Bonjour à tous
Suggest to review your investments, and bank accounts and move to a non-fiat store of assets.
--- End quote ---
I agree with your analysis, but I am not confident the solution is as simple as that. Land and other real estate can be seized by the government for the "public interest" (or personal/political gain). Precious metals can also be seized and were by President F.D. Roosevelt in the depression. He needed something to blame and "gold hoarders" were on his list. That restriction on the legal ownership of bullion lasted in the US from 1933 until 1974 -- long after that emergency. Corporate bonds, which presumably have first claim over stockholders in the event of bankruptcy and liquidation, were also made virtually worthless by President Obama in the bankruptcy of General Motors.
Nothing is completely safe.
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True. In the hands of politics, nothing is safe anyway.
What is safer, though, is anything that can't be "seized".
I'm not going to write a list of examples. Might either not be legal, or give ideas to politics.
jpanhalt:
The Fed just raised its rate 0.25%! Look forward to more potential failures as banks try to maintain liquidity after giving out much lower mortgage rates. Inflation hurts everyone, except the Federal Government. Benjamin Franklin had a pithy quote about that that I won't waste your time repeating.
SiliconWizard:
--- Quote from: jpanhalt on March 22, 2023, 07:41:39 pm ---The Fed just raised its rate 0.25%! Look forward to more potential failures
--- End quote ---
Yes, of course.
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