Bonds Vs Cash

[ArranP]

Hi guys/gals,

With offshore cash accounts (sterling) giving a 5.6% return gross, is there still an argument to invest in bonds?

5.6% offshore Bradford & Bindley Eaccess account

5.85% Isle Of Man Anglo Bank 1yr fixed Bond

The bonds I 've seen that give more than a 5.6% return tend to carry a risk ie. junk bonds.

Regards

Arran.

[topfield]

Hi guys/gals,

With offshore cash accounts (sterling) giving a 5.6% return gross, is there still an argument to invest in bonds?

5.6% offshore Bradford & Bindley Eaccess account

5.85% Isle Of Man Anglo Bank 1yr fixed Bond

The bonds I 've seen that give more than a 5.6% return tend to carry a risk ie. junk bonds.

Regards

Arran.

Angloirish are a very strong bank but if you are worried, HSBC the strongest bank in the UK is now paying

SIX PERCENT...yes six percent pa on sterling

[bmanly]

Hi guys/gals,

With offshore cash accounts (sterling) giving a 5.6% return gross, is there still an argument to invest in bonds?

5.6% offshore Bradford & Bindley Eaccess account

5.85% Isle Of Man Anglo Bank 1yr fixed Bond

The bonds I 've seen that give more than a 5.6% return tend to carry a risk ie. junk bonds.

Regards

Arran.

I invest in an Australian Bank Account that pays 6.25% at call, check THIS LINK. I also invest in a 2 year fixed term deposit for 9% at this LINK HERE. Even after tax I net 6% on the 2 year deposit, I'll take that any time, very little risk, cheers.

[topfield]

Hi guys/gals,

With offshore cash accounts (sterling) giving a 5.6% return gross, is there still an argument to invest in bonds?

5.6% offshore Bradford & Bindley Eaccess account

5.85% Isle Of Man Anglo Bank 1yr fixed Bond

The bonds I 've seen that give more than a 5.6% return tend to carry a risk ie. junk bonds.

Regards

Arran.

I invest in an Australian Bank Account that pays 6.25% at call, check THIS LINK. I also invest in a 2 year fixed term deposit for 9% at this LINK HERE. Even after tax I net 6% on the 2 year deposit, I'll take that any time, very little risk, cheers.

Dear Friend !

Every currency has differing interest rates !! !!

Kiwis will give you 7 percent plus...much higher than ozzie dollar.

If you want the highest rate try Turkish lira or Indonesian rupiah which have huge interest rates

This posting concerned sterling...perhaps the person making this posting assumes like many others that this is a UK website..in fact its for all expats from every corner of the globe.

[ArranP]

Hi guys/gals,

With offshore cash accounts (sterling) giving a 5.6% return gross, is there still an argument to invest in bonds?

5.6% offshore Bradford & Bindley Eaccess account

5.85% Isle Of Man Anglo Bank 1yr fixed Bond

The bonds I 've seen that give more than a 5.6% return tend to carry a risk ie. junk bonds.

Regards

Arran.

I invest in an Australian Bank Account that pays 6.25% at call, check THIS LINK. I also invest in a 2 year fixed term deposit for 9% at this LINK HERE. Even after tax I net 6% on the 2 year deposit, I'll take that any time, very little risk, cheers.

Dear Friend !

Every currency has differing interest rates !! !!

Kiwis will give you 7 percent plus...much higher than ozzie dollar.

If you want the highest rate try Turkish lira or Indonesian rupiah which have huge interest rates

This posting concerned sterling...perhaps the person making this posting assumes like many others that this is a UK website..in fact its for all expats from every corner of the globe.

@ Topfield, thanks for the tip of 6% from the hsbc!

The 2 year fixed term Australian deposit deposit of 9% is quite attractive at first glance, however when you look further, the AUS/GBP currency pair has flucuated approx 4% in the past two years. This is a risk, the gain could be easliy wiped out by a future fluctuation in this pair.

Yes, the examples I gave of 5.6% and 5.85% were referring to sterling, however these were examples of typical interest rates in sterling to campare with against potiential rates in sterling bonds.

Some people have mentioned to invest in bonds, Also I see it in many places on investment websites, but I'm unable to convince myself to invest in them when there are guaranteed savings accounts around at 5.6% to 6%. There are bonds around that pay higher but these tend to be junk bonds and thus have a higher risk that maybe could mean one lose their initial capital investment.

Regards

Arran.

[bmanly]

Arran, when ever I make a decision on where to park my money I take 2 things into consideration. 1. Interest rate and 2. time frame.

If a safe at call bank account is going to pay you 6% without any risk and a 10 year Government bond was paying 6% without any risk I would definitely take the 6% account at call. That is because I can pull it out at moments notice to use it elsewhere should a better opportunity arise. Why tie it up and be subjected to the ups and downs of the bond during its investment time frame? I think you are thinking along those lines too.

[backflip]

"If a safe at call bank account is going to pay you 6% without any risk and a 10 year Government bond was paying 6% without any risk I would definitely take the 6% account at call. "

You completely ignored the tax implication. Nice. In the US the interest/dividend of a US security is free from Federal income tax. In other words, you're willing to sacrifice a huge portion of your income. I'm not sure that I want you as my tax advisor. Another point to ponder, or ignore, is the threshold of investment insurance depends upon if you use a "bank" or the "government".

Edited January 6, 2007 by backflip

[bmanly]

"If a safe at call bank account is going to pay you 6% without any risk and a 10 year Government bond was paying 6% without any risk I would definitely take the 6% account at call. "

You completely ignored the tax implication. Nice. In the US the interest/dividend of a US security is free from Federal income tax. In other words, you're willing to sacrifice a huge portion of your income. I'm not sure that I want you as my tax advisor. Another point to ponder, or ignore, is the threshold of investment insurance depends upon if you use a "bank" or the "government".

The OP didn't ask or mention anything about tax so we did not discuss it. If we were to talk about tax effective investments then I would buy fully franked dividend paying stocks, you know that backflip we have talked about this before. By the way I wish we could get free from Federal income tax bonds, is that really so? Lucky Americans.

[backflip]

"The OP didn't ask or mention anything about tax so we did not discuss it. "

But, to make an intelligent investment decision, you need to consider the tax implications. For a US citizen, federal debt instuments are free from federal - but not state - income taxes. Similarly, municipal debt instruments are free from state - but not federal - income taxes.

[kdvsn]

"If a safe at call bank account is going to pay you 6% without any risk and a 10 year Government bond was paying 6% without any risk I would definitely take the 6% account at call. "

You completely ignored the tax implication. Nice. In the US the interest/dividend of a US security is free from Federal income tax. In other words, you're willing to sacrifice a huge portion of your income. I'm not sure that I want you as my tax advisor. Another point to ponder, or ignore, is the threshold of investment insurance depends upon if you use a "bank" or the "government".

Only municipal bonds are free from US Federal Income Tax, on Treasury Bonds and commercial bonds you'll need to pay tax on any interest paid.

Edited January 7, 2007 by kdvsn

[Khun ?]

Gov bonds are taxed at your rate of income. Muni bonds If issued from state you claim as home

are both state and Fed tax free. Many muni bond funds do have some AMT tax so it is something

to look for. MUA, NUV, MAF and UTF have done well for me this year. Too many to choose from

so one thing would be to look for discount to NAV.

[topfield]

Hi guys/gals,

With offshore cash accounts (sterling) giving a 5.6% return gross, is there still an argument to invest in bonds?

5.6% offshore Bradford & Bindley Eaccess account

5.85% Isle Of Man Anglo Bank 1yr fixed Bond

The bonds I 've seen that give more than a 5.6% return tend to carry a risk ie. junk bonds.

Regards

Arran.

HI ARRAN

The Angloirish IOM rate of 5.85 for one year is indeed called a bond but it is in fact just a one year fixed deposit with same security as their other deposits . This bank is quite unique as it allows you to break the bond (deposit) without penalty or interest loss with max withdrawal 20 % of bond value. This excellent term gives the feel good factor of knowing funds are always available for an emergency.

[ArranP]

Anyone know of "non-junk bond" sterling bond that can out-perform 5.95% or 6%?

@ Backflip, These deposit accounts I've used to compare bonds with are all offshore and pay gross. Where UK citizens have gained non-tax-residency status the UK government are only interested in UK derived income.

I'm guessing the next logical question then would be... Wouldn't one pay tax in which ever country they are residing?

I'm not sure how the thailand goverment would determine when a person should be paying tax in thailand? When their income is coming from offshore, also may do some perpetual touring around Asia.

[ArranP]

Hi guys/gals,

With offshore cash accounts (sterling) giving a 5.6% return gross, is there still an argument to invest in bonds?

5.6% offshore Bradford & Bindley Eaccess account

5.85% Isle Of Man Anglo Bank 1yr fixed Bond

The bonds I 've seen that give more than a 5.6% return tend to carry a risk ie. junk bonds.

Regards

Arran.

HI ARRAN

The Angloirish IOM rate of 5.85 for one year is indeed called a bond but it is in fact just a one year fixed deposit with same security as their other deposits . This bank is quite unique as it allows you to break the bond (deposit) without penalty or interest loss with max withdrawal 20 % of bond value. This excellent term gives the feel good factor of knowing funds are always available for an emergency.

Hi topfield,

Really nice to know the cash is there if its needed, for example to catch an upward trend in an equity index.

For example, the last 6 months saw the ftse100 and ftse midcaps rise 6% and 17% respectively.

It may be possible avoid/minimise the tax implication when non-tax-resident by trading via an offshore broker?

Also there is the risk of the index value not rising but falling.

Regards

Arran.

Regards

Arran.

[nev]

Hi guys/gals,

With offshore cash accounts (sterling) giving a 5.6% return gross, is there still an argument to invest in bonds?

5.6% offshore Bradford & Bindley Eaccess account

5.85% Isle Of Man Anglo Bank 1yr fixed Bond

The bonds I 've seen that give more than a 5.6% return tend to carry a risk ie. junk bonds.

Regards

Arran.

I invest in an Australian Bank Account that pays 6.25% at call, check THIS LINK. I also invest in a 2 year fixed term deposit for 9% at this LINK HERE. Even after tax I net 6% on the 2 year deposit, I'll take that any time, very little risk, cheers.

mate how secure is the 9% investment, you say little risk?

are they debentures,if they are i have been warned they are risky,i am looking for a safe place to park my money, so i have ordered a prospectus.

i am in australia too, have mt money in bankwest internet account pays 6.8%for first 12 months goes down to i think 6.2% after.

my 12 months are almost up so i will look in to you're recomendation.

thanks nev

[bmanly]

Hi guys/gals,

With offshore cash accounts (sterling) giving a 5.6% return gross, is there still an argument to invest in bonds?

5.6% offshore Bradford & Bindley Eaccess account

5.85% Isle Of Man Anglo Bank 1yr fixed Bond

The bonds I 've seen that give more than a 5.6% return tend to carry a risk ie. junk bonds.

Regards

Arran.

I invest in an Australian Bank Account that pays 6.25% at call, check THIS LINK. I also invest in a 2 year fixed term deposit for 9% at this LINK HERE.. Even after tax I net 6% on the 2 year deposit, I'll take that any time, very little risk, cheers.

mate how secure is the 9% investment, you say little risk?

are they debentures,if they are i have been warned they are risky,i am looking for a safe place to park my money, so i have ordered a prospectus.

i am in australia too, have mt money in bankwest internet account pays 6.8%for first 12 months goes down to i think 6.2% after.

my 12 months are almost up so i will look in to you're recomendation.

thanks nev

Nev, Ausec uses the deposited funds for short term lending and they use real estate as collateral. They only take on first mortgages and they only lend to about 70% (can't remember the exact figure) of the value of the property. They use independent valuers to value each property they lend against. There was a independent report done on them at this link HERE

I have been with them for 2 and a half years now and I take the Monthly income option as I am retired and need the income. They have always paid my money on time and their service has been great.

In the end there are no guarantees for anything anywhere in life and as I am not a financial advisor I can not make any recommendations legally, but mate as an ordinary investor it works for me, cheers.

[nev]

mate thanks for that mate.

i have applied for a prospectus.

mate you can get a good return, and have growth on your money too if you invest in PM CAPITAL australian opportunities fund.

returned since inception 17.8% that is 7.4% income 10.4% growth. you need a minimum $20000.

not a bad option too.

www.pmcapital.com.au

nev