[BusinessSingapore]

Originally Posted by Unregistered

Bonds are not without risks especially the non rated ones which tended to be those giving higher yields. It was just last year? that a few bonds (those related to O&G) went belly-up and investors lost their capital.

Given the current relatively high stock market valuations, it is ok to sit tight on cash position. Holding cash is also a strategy in the overall investment scheme of things.

If she is secure in her employment, then yes, I would agree for her to take a little risk and invest for potentially higher returns.

I have gone through this phase before where I have set a savings target to meet. The surest way (not necessary the quickest nor the most efficient) to meet the target was through pure savings and keeping the savings in an FD.

But once my capital has grown bigger, it gets easier to take on more risk. And thats when I started investing in stocks and eventually progressing to property investment. It's about comfort level and margin of safety.

There is no right or wrong.

Thanks for the reply.

However I have to disagree on most if not all points.

Bonds come in "shapes and sizes" from sovereign to corporate issuers; from AAA rated to unrated. To put it simply, there are safe ones and there are speculative ones. The one that you mentioned happened to be the ones with a high level of risk, issued by an industry that is undergoing a lot of challenges now. Swiber ISIN SG55E0991457 bonds are High Yield unrated Bonds that pays 7.15% coupons, that itself should already hold enough information to tell investors this is a riskier bond, from the name itself high yield, unrated and high coupon. So no, its not a fair comparison for a low risk appetite investor.

However, if you look at bonds that are more in context say an AAA rated bonds by Temasek Holdings SGD issued bonds ISIN SG7W86960343, you are looking at a 4.2% coupon (interest) which is a good 2X to 3X higher than a FD. And if you are concern about liquidity and ticket size since bonds tix size is usually 250K and up then go into a SGD bond fund that buys into local bank bonds (OCBC UOB DBS), Temasek Bonds and SG Gov Bonds. If you pick a top 10% peer group rating SGD bond fund you will be yielding 3%+ Net of management fees averagely.

My position is simple, picking the most efficient returns on the same level of risk. To me, the risk of FD is the bank's chance of default and whether or not the bank defaults depends on the SG Gov (local banks). So ultimately I am placing a bet on SG Gov, and if I can put my money into Temasek, DBS SG Gov Bonds that gives me more returns, why should I want to put it into FD when the underlying risks are the same?

That said, I fully understand (after reading the replies by both of you) your positions and I have to conclude it is seeking emotional safety(very impt btw) but it isn't factual.

I am not willingly to take up too much risk due to market conditions

You gotta be joking man, all major index across the world has returned positively over the past 12 months and I mean all, literally. Time to open your eyes and make a killing now.