Investing

Fixed income in 2020 is bad or good?

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  • Feb 8th, 2020 10:36 am
[OP]
Newbie
Feb 3, 2020
12 posts
4 upvotes

Fixed income in 2020 is bad or good?

Fixed income in 2020 is bad or good? As a newbie in investment ( two lazy years) I am trying to figure out and do some make over of my portfolio.
I mean, investing for 10~15 yrs sounds a bit extreme to me, like world war 3 can break out and corona virus can kill all of us.
Well, put all those wild imaginations aside, we all know the interest rates have been really low and wonder if I should dodge fixed income and find more
global market ex North America or something else (gold, water, consumer debt, REIT...)
10 replies
Member
Dec 2, 2014
405 posts
226 upvotes
Toronto, ON
Your $10000 in fixed income will be 12200 in 30 years time while my $10000 in stocks will have x20ed during that period. If you hate making money sure you do you.
Deal Addict
Jun 28, 2018
1031 posts
788 upvotes
Toronto
Cjl0dk4 wrote: I mean, investing for 10~15 yrs sounds a bit extreme to me, like world war 3 can break out and corona virus can kill all of us.
Every year, month, day there's something out there to kill us and knock down the markets.
No point worrying about it now because you'll never know what will really hit. 10-15 years is nothing because in that time you could also miss out on gains that outmatch the losses from those black swan events.

Plus you would be buffered by prudent money management. Invest what you can afford to lose or take the risk and put in more.
The Distracted Investor

Dividends through quality companies 😃 Though I usually lose money with trades :facepalm:
Deal Addict
Jun 14, 2018
1282 posts
1569 upvotes
Yes, stick with fixed income. Better yet, have it all in cash and stuff it in your couch. Can't ever be safe enough.
Deal Addict
Jul 27, 2017
2180 posts
949 upvotes
Cjl0dk4 wrote: Fixed income in 2020 is bad or good? As a newbie in investment ( two lazy years) I am trying to figure out and do some make over of my portfolio.
I mean, investing for 10~15 yrs sounds a bit extreme to me, like world war 3 can break out and corona virus can kill all of us.
Well, put all those wild imaginations aside, we all know the interest rates have been really low and wonder if I should dodge fixed income and find more
global market ex North America or something else (gold, water, consumer debt, REIT...)
reward for risk, whether its one mth, 12 mths, 5, 10, 15, 30 years - things can & do change along the way.

2020 fixed income on the basis its in a TFSA, why not put $10k in one of those daily interest ~3% HISA discussed on RFD?

other than that or sticking it in a cookie jar - is it possible to do better with an almost 100% guarantee of principle - I'll let others post their comments for any personal investment picks.
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User avatar
Dec 14, 2010
6895 posts
8910 upvotes
Cjl0dk4 wrote: Fixed income in 2020 is bad or good? As a newbie in investment ( two lazy years) I am trying to figure out and do some make over of my portfolio.
I mean, investing for 10~15 yrs sounds a bit extreme to me, like world war 3 can break out and corona virus can kill all of us.
Well, put all those wild imaginations aside, we all know the interest rates have been really low and wonder if I should dodge fixed income and find more
global market ex North America or something else (gold, water, consumer debt, REIT...)
I think the better question is around the timeframe on when you require these funds. If a portion will need to be cashed out soon, you need to protect capital, so fixed income makes sense as your primary goal is not capital growth, it's capital preservation. But for the amount that won't be cashed out soon, you have time on your side. So have it exposed to the assets that provides better return overtime. If indexing, dollar cost average it. If buying individual companies, focus on quality and valuation to maximize your margin of safety. Yes, they will be volatile, but you shouldn't care about volatility if you have a long time horizon. If it's hard to stomach volatility, then have a mixed approach, like couch potato. The time horizon and risk tolerance should drive the decision to the different assets to be invested on, instead of emotions around news and macro events that will always be there and plays a small role for the long term growth of equities.


Rod
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Jr. Member
Dec 1, 2019
169 posts
156 upvotes
The reason everyone talks about long time horizons is because those funds are for retirement.

Sure you can have your retirement money just sitting in your bank's savings account, but inflation is gonna make all that virtual electronic money worthless by the time you retire.

That's why you tie the value of your nest egg to the growth of the (global) economy.

In terms of investing in gold as a hedge against anything - how do you think you're going to use it if WW3 ever hits?
How are you going to prevent yourself from getting mugged when you show the cashier a gold bullion in the bread line?
How are you going to access your Gold ETF on your online broker if the entire country's power grid is knocked out?

But enough about gold, here's a copypasta.
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Member
Jan 31, 2008
487 posts
202 upvotes
Montreal, Quebec
I like fixed income investments but it's good to have a diverse selection in my view (royalty trusts, dividends, preferreds, reits, bonds)

Don't believe that you will barely make any money in fixed income.

You can easily secure 8% plus with safe preferreds/income trusts and if you shelter it in a TFSA or RRSP, you can compound the payments which adds up and risk is minimal.

It depends on your circumstances. I added multiple fixed income securities with half my portfolio over the month, most of which also offer the potential of upside w/ a little more risk.

Right now, I prefer "defensive' fixed income securities because I am bearish on the stock market. REITS and a utility w/ good dividends like Altagas are good opportunities in my view.
"It is never too late to be what you might have been. "
Deal Addict
Jul 27, 2017
2180 posts
949 upvotes
@095179005 post #7, from your post along with the image, some basic common sense in that.

does this mean that without knowing what the future holds that folks can still figure out the best investment, know the risk, the returns and their ability to liquidate?

simple answer is - 'no they cannot nor can anyone else' & I don't have the answer to the 'what-if'

if there is anyone on this thread that can post the best investment that will weather the storm, lets hear it.

all anyone can hang their hat on is past performance which is not indicative of future results, which is where many investors are [betting] hanging their hats on.

war, inflation, financial institution collapse, stock market collapse, act of god, pandemic, the plague .... all are as unpredictable as a market correction or collapse.

folks will pipe in that over a 25 year time span things will correct themselves, recovery is inevitable [is it?] .... how many folks have 25 years to wait it out, especially if you they are holding stocks or ETF's in companies that go bust.

cover yourself & figure out if 50%, even 75% of your assets were lost
095179005 wrote: The reason everyone talks about long time horizons is because those funds are for retirement.

Sure you can have your retirement money just sitting in your bank's savings account, but inflation is gonna make all that virtual electronic money worthless by the time you retire.

That's why you tie the value of your nest egg to the growth of the (global) economy.

In terms of investing in gold as a hedge against anything - how do you think you're going to use it if WW3 ever hits?
How are you going to prevent yourself from getting mugged when you show the cashier a gold bullion in the bread line?
How are you going to access your Gold ETF on your online broker if the entire country's power grid is knocked out?

But enough about gold, here's a copypasta.
Deal Addict
Jul 27, 2017
2180 posts
949 upvotes
jackrabbit000 wrote: Your money, save, invest it wherever you like or feel comfortable.
agree, although some RFD'ers have their personal picks .... index, ETF's, dividend growth, CCP, the flavour of the moment or 'follow the crowd'

best I can do or come up with is 'believe in where I live' invest in the Canadian Banking system even if its a 2% - 3% HISA or sticking it under the mattress or in a cookie jar.

too me even when looking at past performance - investing in the market is a crap shoot.

invest only what [you] the individual is prepared to lose.

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