MBH/A35 alternatives

[reddevil0728]

I am expect the grow to be slower than normal stock, but at least the capital is guarantee, in the first place

Bond = safe

that why I choose bond over stock

but my bond keep dropping and dropping and nvr recover for many year, now in a loss

This is bond fund not bond.

hence your idea of what it is mistaken.

 

[soulblader_89]

This is bond fund not bond.

hence your idea of what it is mistaken.

okk fine, i will sell it alrdy...hold it for too long

i always tot bond fund = iron ricebowl/ cpf

i was wrong

 

[s0crates]

should I sell the ABF?

I have $10k worth of ABF

but is at lost now

Suggest you read through the thread and try to digest the content. Bond investing is quite complex and even reasonably smart and educated people can still have the wrong takeaways from bond investing.

Some folks think simplistically that their Astrea were a great investment because they got their principal back. Or that bond risk is mainly around credit risk.

I think you should read up more on duration risk and understand what is your original financial goal of ABF or the role of ABF in your portfolio. With that you can choose the right product.

I would still maintain that ABF and MBH is an inferior product in a longer term buy and hold financial portfolio and goal, but it is better to buy an inferior product with the right expectations than buy a superior product with the wrong expectation.

 

[fr33d0m]

bond fund/etf are trading for yield, not the underlying instruments.....

the underlying instruments are just a mean to reflect the current market yield.

when yield rises, price drops; when yield drops, price rises.

 

[888888888888]

okk fine, i will sell it alrdy...hold it for too long

i always tot bond fund = iron ricebowl/ cpf

i was wrong

I think you may regret it in future out at this level, near lows. This is a downside of dca, locked in and locked at highs. If removed then it no longer is considered passive which violates the original investment intent. Which helps soothes the volatility fluctuations of the equity side and or act as risk diversifier. And this low risk type not really meant for yield.
Of course, each person is different. Your opportunity cost, alternatives and risk profile.

 

[reddevil0728]

okk fine, i will sell it alrdy...hold it for too long

i always tot bond fund = iron ricebowl/ cpf

i was wrong

Yep. You misinterpreted.

 

[Happyhappydays]

okk fine, i will sell it alrdy...hold it for too long

i always tot bond fund = iron ricebowl/ cpf

i was wrong

The ABF bond price is dropping due to the rising interest rate environment.

When interest rates start to fall, the bond price shld rise again.

The uncertainty is that interest rates may takes months, years or even decades (??) to fall. So when u say u hold for “too long”, it depends on ur own conviction of what is “too long”.

But I think what is the least likely to happen is for the bond price to fall completely to zero.

 

[d5dude]

The ABF bond price is dropping due to the rising interest rate environment.

When interest rates start to fall, the bond price shld rise again.

The uncertainty is that interest rates may takes months, years or even decades (??) to fall. So when u say u hold for “too long”, it depends on ur own conviction of what is “too long”.

But I think what is the least likely to happen is for the bond price to fall completely to zero.

A35 holds mostly SGS so they will not fall to zero, the key risk for A35 is duration and interest rate risk. The outlook was always going to be poor when long duration yields fell to 0.5% back in 2021 since yields can't really go much lower than zero (even in countries with a crazy amount of money printing like Japan).

I think many investors simply didnt know what they were buying, the return of a bond is mostly fixed, its 95% correlated with the starting yield (YTM), bond prices can go higher when interest rates fall but investors should not count on that happening since that is largely unpredictable. So always look at the starting yield/duration when investing in any bond/bond fund, they are the most relevant.

 

[Purplestars]

All kenna smoke by Shiny Things

 

[reddevil0728]

All kenna smoke by Shiny Things

What did shiny things smoke?

is it a case of misunderstanding ST or is it a case of ST smoke?

I think cannot simply assume ppl did wrong things = kena smoke by ST.

but rather ppl assume wrong things.

 

[Shiny Things]

I am expect the grow to be slower than normal stock, but at least the capital is guarantee, in the first place

Bond = safe, that why I choose bond over stock
but my bond keep dropping and dropping and nvr recover for many year, now in a loss

Yeah. Bonds and bond funds are safer than stocks - but nothing is bulletproof, as everyone's been reminded over the course of 2022. When interest rates go up, bond prices drop. Heck, my bond funds dropped as well, even the short-dated funds which are typically less volatile.

There are two things that make things better:
1) Because bonds "pull to par" - that is, the price drifts toward 100 cents on the dollar as they get closer to maturity - the capital losses that we all incurred in bonds and bond funds in 2022 will tend to disappear over time;
2) Interest rates are now a lot higher than they were—so your existing money is earning more, and if you put new money into bonds or bond funds, you'll be buying bonds at the cheapest they've been in years or decades.

That said, bonds are capital guaranteed only if you hold them until they mature. Capitulating and selling while prices are low will lock in those losses. (And bond funds aren't capital guaranteed, except in a few very rare cases.)

okk fine, i will sell it alrdy...hold it for too long
i always tot bond fund = iron ricebowl/ cpf
i was wrong

Before you sell, think for a sec: what are you going to do with the money instead? If that money is part of a diversified stock-and-bond portfolio, then you want to leave it in, and take advantage of the higher yields that are going on now.

What did shiny things smoke?

is it a case of misunderstanding ST or is it a case of ST smoke?

I think cannot simply assume ppl did wrong things = kena smoke by ST.

but rather ppl assume wrong things.

This guy's a hater - don't reply to him. I blocked him.

 

[s0crates]

Not sure if people are still interested in SSBs, but these recently have also proved to be a lot more complex and require more thought than expected.

Relative to similar tbills and other newly issued short term SGS, the yield for first few years is unattractive. In case of interest rate dropping, we also lose out on potential capital gains when we want to sell as well.

Of course people will make a point that SSB 100% guaranteed on capital, but the cost of this feature, along with accrued interest, is really expensive in a inverted yield curve environment.

Bonds are really complex isn't it

 

[reddevil0728]

Not sure if people are still interested in SSBs, but these recently have also proved to be a lot more complex and require more thought than expected.

Relative to similar tbills and other newly issued short term SGS, the yield for first few years is unattractive. In case of interest rate dropping, we also lose out on potential capital gains when we want to sell as well.

Of course people will make a point that SSB 100% guaranteed on capital, but the cost of this feature, along with accrued interest, is really expensive in a inverted yield curve environment.

Bonds are really complex isn't it

tbh i think need to separate complexity from what's available.

it's when you mix all up then becomes complex

 

[fr33d0m]

Not sure if people are still interested in SSBs, but these recently have also proved to be a lot more complex and require more thought than expected.

Relative to similar tbills and other newly issued short term SGS, the yield for first few years is unattractive. In case of interest rate dropping, we also lose out on potential capital gains when we want to sell as well.

Of course people will make a point that SSB 100% guaranteed on capital, but the cost of this feature, along with accrued interest, is really expensive in a inverted yield curve environment.

Bonds are really complex isn't it

What SSB tries to do is to achieve parity with 10-year SGS. If you want to liquidate earlier, that's NOT the right instrument for you.

correction: NOT

 

[s0crates]

tbh i think need to separate complexity from what's available.

it's when you mix all up then becomes complex

Financial planning is to find the best product to suit your financial needs and goals. If you just buy products as is rather than understand it's limits then it will lead to sub optimal outcomes.

My observation is that most pple just buy products and don't understand what lies beneath the hood.

What SSB tries to do is to achieve parity with 10-year SGS. If you want to liquidate earlier, that's the right instrument for you.

Not in this case. As I say, SSB Is capital guaranteed but don't enjoy any capital gains. It sucks in this environment.

I rather we have a more liquid sgs market than have SSB. Managing ssb is a pain in the ass.

 

[reddevil0728]

Financial planning is to find the best product to suit your financial needs and goals. If you just buy products as is rather than understand it's limits then it will lead to sub optimal outcomes.

My observation is that most pple just buy products and don't understand what lies beneath the hood.

For sure. a lot of people just likes to be told rather than understand.

what i'm saying is, for certain stuff if you look at it standalone, it might not be too complex, but when u add in other the other stuff, then it becomes complex

Not in this case. As I say, SSB Is capital guaranteed but don't enjoy any capital gains. It sucks in this environment.

I rather we have a more liquid sgs market than have SSB. Managing ssb is a pain in the ass.

depends on the objective i guess.

no right or wrong

 

[fr33d0m]

Financial planning is to find the best product to suit your financial needs and goals. If you just buy products as is rather than understand it's limits then it will lead to sub optimal outcomes.

My observation is that most pple just buy products and don't understand what lies beneath the hood.


Not in this case. As I say, SSB Is capital guaranteed but don't enjoy any capital gains. It sucks in this environment.

I rather we have a more liquid sgs market than have SSB. Managing ssb is a pain in the ass.

you can rather anything. It does not mean whoever/whichever need provide it for you.

 

[s0crates]

you can rather anything. It does not mean whoever/whichever need provide it for you.

Of course. Purpose of this thread is to provide a more in-depth and balanced view of existing products, and how to use them with more finesse and right expectations.

 

[fr33d0m]

Of course. Purpose of this thread is to provide a more in-depth and balanced view of existing products, and how to use them with more finesse and right expectations.

You need realize what SGS market is for and then you will understand that it is very unlikely that there is ever going to be active secondary market. The expectation is held-to-maturity. What you want does not exist in this market.

 

[sohguanh]

I think this thread mix bond vs bond ETF, bond fund. To me really got differences.

Bond by itself is capital guaranteed once held to maturity. But the entry is high at 250k! Read fsm seem to now have lower requirement for some specific bonds hmmm

Bond ETF,fund is a basket of bonds underlying so if one mature the manager need find new bonds to fill in so it is like ongoing forever until the bond ETF,fund shutdown. In this aspect it is possible you invest and can never get back your capital since bonds keep filling up once others matured and this is reflected in the price shown which go up and down although slower pace than individual stock.