Bonds and shares

Ignoramus
Ignoramus

So I'm considering buying some shares and bonds
Right now I'm considering buying 5 shares for 1000 $ and bonds for 2000 $ because it's my first time so I wanna play it safe.
Should I trust the advisor in my bank or will they try to ''cheat'' me? I'm in Scandinavia btw.

Other urls found in this thread:

bloomberg.com/markets/rates-bonds
cnbc.com/bonds-brazil-treasurys/
en.wikipedia.org/wiki/List_of_sovereign_debt_crises
en.wikipedia.org/wiki/2008-2011_Icelandic_financial_crisis

Fried_Sushi
Fried_Sushi

It really depends. Some banks have sales quotas and are pushing you towards certain products, though this usually happens with their own bonds or with mutual funds from their daughter companies. Other banks are pretty honest. But be aware that nobody has a crystal ball. Ultimately it's your decision and you'll be saddled with any losses. The bank doesn't really care either way. It may be honest advice, it may be honest advice but ultimately false, it may be a scam by the bank, it may be bullshit by a stupid advisor without bank involvement. Take it with a grain of salt. I wouldn't "trust" your advisor so much as I'd take their recommendations into consideration. But still do at least a cursory due dilligence on your own! For some pointers, have them explain their reasoning to you why they recommend exactly those securities and then maybe follow up on some leads they give you.

Although on your entry level with tiny investments it's usually not advised to go around an pick individual titles. You *have* to diversify to lower your risk, but each transaction racks up fees. It's usually safer and more cost effective to buy funds, especially ETFs. Unless you really know what you're doing or you have some special attachment to those 5 companies it's very very hard to beat the market on just 5 stocks.

As a beginner over-weighting bonds is a good idea, although right now is not really an optimal time. Which country are they from? The US is starting to hike interest, Europe is still a bit off, but it's coming. And when the interest rates go up, your bonds will tank (unless you don't care and want to hold until maturity anyway, but they will still pale in comparison to newly issued bonds). But again, a bond ETF may offer better diversification and targeting.

Good luck and have fun.

Burnblaze
Burnblaze

Im considering buying bonds in the government.
I was called by a man from my bank who suggested that we invest my money so they don't loose money so I'll see what he has to say.
I would have no idea what I would be doing if I bought stocks desu but I'm considering using a few money on some stocks still but it's a bit risky isn't?
I'm from Denmark here the average economic growth the last 10 years has been 0 % so I guess they could use my bonds but I don't really know. I'm gonna look it up lol.
Thank you for your answer :)

Boy_vs_Girl
Boy_vs_Girl

"Should i trust the advisor in my bank or will they try to cheat me"
"trust"
top kek
banks make bank by selling their clients (shit tier) products of any variety. bankployees have quota's to fulfill. also its illegal for a bank/advisor to give stock recommendations. better off trading your own plan if you are looking to invest.

lostmypassword
lostmypassword

also its illegal for a bank/advisor to give stock recommendations.
Here it is legal but there are laws on what they can suggest.
better off trading your own plan if you are looking to invest.
So far my plan is to buy government bonds but I have almost no idea what I'm doing so I'm considering talking with an advisor at my bank first.
I never invested money before so I'm afraid I'm gonna screw it up

JunkTop
JunkTop

Im considering buying bonds in the government.
I'm from Denmark

Probably not worth your time. Just looked up 10 year bonds from Denmark: They have a yield of around 0.4% per year - before taxes, transaction fees and whatever your bank charges to hold your securities for you. That's the trouble of living in one of the best and most stable countries - very very low yields on government bonds. Investors trust Denmark to repay its debts and accept these low yields. It's the same in my country. Doesn't help that we're still not fully recovered from the recession and there's still very little demand in European stock markets, means more money in the bond markets, means lower yields.

Sir_Gallonhead
Sir_Gallonhead

my plan is to buy government bonds

in that case do some prep work research.
gov bonds are a safe bet but the return on investment is on the low side. if you plan on actually making money then some risk should be involved in your decision making process.
whatever you might decide though: Diversify. also dont bother with derivates brokers like markets.com or some shit.

DeathDog
DeathDog

I'm not looking to earn money yet my goal so far is just to invest the money in a safe way instead of having them in my bank losing 1-2% value each year.
0,4 % pr. year is pretty low though! It's only the double of what my bank gives me each year for having the money in an account there. What is the site called where you look it up? I will check out other countries.
Yeah I'm considering besides investing in some safe bonds buying 5 stocks for 200 $ each. I don't want to risk too much because I'm inexperienced

PurpleCharger
PurpleCharger

dont bother with derivates brokers like markets.com or some shit.
lol what are some good brokers?

5mileys
5mileys

bloomberg.com/markets/rates-bonds
Here it says that the yield for a government bond in Brazil is 10,81 %. Is that pr. year or is it the yield in total after 10 years? It's the yield for the 10 years isn't?

Inmate
Inmate

Nvm I found a one year governmental bond in Brazil with a 10,8 % yield.
It almost sounds too good to be true?

hairygrape
hairygrape

cnbc.com/bonds-brazil-treasurys/
Here is the link. and the 9 month bond has a yield that is 11,3 %.
Wouldn't it normally be the longer bond that has a higher yield?
Here is the link: cnbc.com/bonds-brazil-treasurys/

Stupidasole
Stupidasole

It almost sounds too good to be true?
Do you trust the Brazilian government to repay its debt? How much national debt in % of GDP does Brazil even have? Do they have a budget surplus or are they operating at a deficit? Do you think Brazil is a politically, economically and financially stable country? Is that bond in USD or BRL? Either way, as a Dane you have an exchange risk and have to put faith in the currency relative to your DKK. If the BRL tanks 15% while you earn 10% interest, you're still at a loss.

Generally longer bonds should have higher yields. It's usually not a good indicator when short-term bonds are significantly higher. It usually means the country is going down-hill, loses investor trust, inflates its currency or gets more and more desperate to refinance.

Just because a government issues the debt obligation doesn't automatically mean it's a safe deal and this risk is reflected in the yield.

Soft_member
Soft_member

Banks always look for themselves. The bank agent who advise you receives a fix salary from the bank plus a commission from the bank too... What do you fucking think he is gonna try to sell you? Something that benefits him and the institution. Don't follow their stupid advise

takes2long
takes2long

Do you trust the Brazilian government to repay its debt?
Well they have to pay me back don't they? Even if they don't have the money, they will probably rent some money another place and pay me back right?
How much national debt in % of GDP does Brazil even have?
66.23 %
do they have a budget surplus or are they operating at a deficit?
They have -80428 BRL Million :O
Do you think Brazil is a politically, economically and financially stable country?
Not really but still somewhat stable. I wouldn't expect them to go bankrupt
If the BRL tanks 15% while you earn 10% interest, you're still at a loss.
Yeah that's a risk. If I make a 9 month bond it can't possibly change that much in that period i guess.

Yeah It's a quiet risky bond but I would expect them to pay back no matter what? well since they have a budget with so much minus it's likely too that they won't be able to pay back but still they have to don't they?

I also considered buying Icelandic bonds, there the yield is 5 % and the valuta follows the Euro like the Danish crowner so there the valuta difference wouldn't be a problem. Iceland has 68,5 % government debt to GDP though so I guess that's why they could use my money

SniperGod
SniperGod

Well if it's government bonds they should pay back shouldnt they? I know there's a lot of corruption there but they can't just ''steal'' my money can they?

Lunatick
Lunatick

bump

Garbage Can Lid
Garbage Can Lid

shameless self-bump

idontknow
idontknow

Well they have to pay me back don't they?
they can't just ''steal'' my money can they

In theory they could refuse to pay, especially if it's a bond in their domestic currency issued in their home country. They have full control over the governing law after all. It would be financial suicide though, since then nobody would lend them money anymore.

The actual danger is less malice and more incompetence. There's been plenty of historical examples for countries either defaulting or getting so close that they have to institute a moratorium or even a haircut. Just some recent examples: Venezuela, Greece, Argentina, etc.
en.wikipedia.org/wiki/List_of_sovereign_debt_crises

If you're looking to invest on the financial markets, generally there's no such thing as a free lunch. If it looks too good to be true, you just haven't realized the catch yet (or it's a straight-up scam). Since it's just pushing digital numbers around, these global markets are *very* efficient.
Bonds have two components: The price and the interest. If you buy a bond at 100 and it has 5% interest, then your yield (ROI) is 5%. But if the markets agree that this is a great deal because there is low risk, demand will drive the price up. Suddenly you have to pay 125 to buy the bond, but the interest is still calculated from the nominal value of 100, so you get 5 in interest on 125 price, ie only 4% effective yield. These adjustments happen all the time, so (in theory) they should be pretty close to representing the actual risk. If you want better returns you have to take on a higher risk. Nobody would let a low risk, high interest paper sit at a low price.

Evilember
Evilember

Denmark

Your broker won't fuck you but SKAT will! The best investment you can make is voting for Denmark to leave the EUSSR.

Flameblow
Flameblow

Niggerdea bank by the way I can't believe they charge you for online access

TurtleCat
TurtleCat

Oh I see it happened many times to Brazil so I guess that's why the yield is so high. But still it seems a bit unlikely that it would happen in the next nine months but you never know. It's risky! I wouldn't put a lot of money there but I'm tempted to but a few in there.
Nobody would let a low risk, high interest paper sit at a low price.
Makes sense I guess there's something with the Icelandic crowner since the yield is so high. It did collapse in the financial crisis so maybe that's it? Now it seems to be going all right there economically they have 82 % employment! :O But still a lot of debt. Could the high debt be the reason why the yield is so high on government bonds on Iceland?
Thanks for your answer

RumChicken
RumChicken

Will I pay taxes of the money I earn on bonds? I will vote on Enhedslisten to do that
what a rip off I have Danske Bank and I don't pay anything for online access

GoogleCat
GoogleCat

Could the high debt be the reason why the yield is so high on government bonds on Iceland?
Yeah, no shit. Have you been living under a rock?
en.wikipedia.org/wiki/2008-2011_Icelandic_financial_crisis

They had to bail out three huge banks, taking on debt several times their GDP. The financial crisis really did a number on Iceland, they came incredibly close to defaulting.

In general, high debt means lots of interest payments, means less money in the budget. Random example: If 60% of your annual budget already goes towards paying off interest on old loans before the year even starts, you can imagine that this government doesn't have a lot of wiggle room to invest into the country. They can only use 40% of their earnings anymore and if they take on more debt to make necessary payments, next year they'll only have 38% available due to even higher interest payments. And so far we haven't even considered that they should actually repay this debt to free themselves of the interest obligations - but where should the money come from? It's a death spiral, a vicious cycle once you've surpassed a critical amount of debt.

Spazyfool
Spazyfool

It's a death spiral, a vicious cycle once you've surpassed a critical amount of debt.
That's sad. But if I can make money on it I'll do it. Hmm I'm considering buying just a little Icelandic bonds because the yields are so good and then investing in safe bonds too

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