I want to buy some corporate bond to diversify my investment. Do I need to worry if the company is going to bankrupt or not. For example, George Weston Limited?
-happy2001(simplelife);
2008-4-26(#32505@43)
Of course, you need to worry, because it's not government bond and has risk. Check company's credit ratings before you buy. But why George Western? Their Loblaw business is struggling.
-xjurum(要塞玫瑰);
2008-4-26(#32522@43)
Thanks a lot for your reply. I picked up George Western just because it has a higher yield. I thought even some part of the business is struggling, generally grocery is a recession-proof sector. This company has a long history andI hope it will survive long. For corporate bond, as long as it doesn't go bankrupt, I don't need to worry, am I right? As for the credit rating for this bond, it's BBB. Good credit bond is normally government bond and has very low yield, not better than GIC.
-happy2001(simplelife);
2008-4-26{261}(#32523@43)
You are only looking at default risk. There is risk on the other side. If the company's rating gets worse, or yield goes even higher, your bond value will depreciate. So you always need to worry how the business is doing, saving bankruptcy.
-xjurum(要塞玫瑰);
2008-4-26(#32530@43)
PLease tell me more details about this bond, such as maturity date, YTM, coupon rate, I can share you some ideas.
-xz2029(秋日河岸,白云流动);
2008-4-26(#32540@43)
Thanks in advance. Details of this bond:Action: Buy
Quantity: 5
Facsue: George Weston Limited Canada Callable
Execution Type: SUBJECT
Price: 94.107
Yield: 6.26562
Principal: $4,705.35
Accrued Interest: $35.97 (52 days)
Settlement Amount: $4,741.32
Settlement Date: 05/01/2008
Thank you so much for your time and help. I tend to think bond is not as risky as stock. For example, if I buy stocks of George Western Limited, I need to worry more about company performance. Buying bond,I only need to worry if it will go to default. For call, I don't know when. I guess it could happy anytime. It's part of the risk or I could think as long as I get the money back, it's fine to get it back earlier.
-happy2001(simplelife);
2008-4-28{216}(#32600@43)
If we only consider the risk of default, of course holding bond is safer than holding stock because whenever the company collapses, the first to be repaid is bond holder instead of stock holder.
-xz2029(蘑菇妹);
2008-4-28(#32710@43)
Thanks a lot for your further reply. I decided to go ahead to buy $5000 as a long term investment to diversify my portfolio.
-happy2001(simplelife);
2008-4-29(#32771@43)
Stay away from individual corporate bonds. You don't have the skills for that task. You're doing something you don't understand and this is the biggest risk.
-pigking2008(铜头猪王 - 我不回PM);
2008-4-29(#32772@43)
I am happy to see your response. Could you explain a little bit more why you are against corporate bond? Are you agaist every one of them or only those ones from bad company?You are right. I don't have too much knowledge. The reason why I want to buy was stated above in my a few postings. Do you find something seriously wrong with me? Thanks in advance.
-happy2001(simplelife);
2008-4-29{182}(#32777@43)
从Diversify的角度可以买一些企业债券,但最好买Bond Index Fund。你挑单个买和买单个股票本质上没有区别,就是认为自己能beat the market,但你实实在在地问问自己: Can I ? The odds are against you .....我个人不买企业债券基金(我这里主要是指的垃圾债券),垃圾企业债券(BBB以下?)和股票的相关性太大(0.7左右). BBB以上的企业债券,不如直接买政府债券算了。(我主要要买短期政府债券和TIPS)