Author Topic: Government Day-to-Day  (Read 53302 times)

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Online wilber

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Re: Government Day-to-Day
« Reply #480 on: June 25, 2020, 12:46:39 pm »
And yet they’re buying it.

You know they are buying long term debt for a fact?
 
A one year bond is paying .27%. A 30 year bond is paying 1.02%

If you buy a 30 year bond at 1.02% and in ten years rates are at 3%, you are stuck with your money invested at 1.02% for the next 20 years and a bond you would have to sell at a big discount if you wanted to get rid of it. If you keep buying one year bonds, all you stand to lose is .27%. That 30 year bond is one hell of a gamble.

I have several bonds and GIC's coming due this year and it isn't looking good. I'm not locking money in for a long term at next to no interest. Right now I wouldn't go longer than three years and there would need to be a good reason to go that long. I stand to lose little by going short term and hoping rates improve. I stand to lose a lot by going long term at a very low rate.

You may think these rates are good for government but they are very hard on pension plans, RRSP's, RRIF's, TFSA's and any other personal investments people may have for retirement.
« Last Edit: June 25, 2020, 01:42:51 pm by wilber »
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