(The) Boring Investor

Now that you will be equipped with the essential knowledge of trading SGS bonds, another question to ask is when to buy or sell. To answer this relevant question, you should know the current yield in accordance with the historical range. A useful tool is to plot the cumulative distribution of the historical produces and the current yield.

See the graph below. The lines symbolize the cumulative distribution of the historical yields of most benchmark bonds while the triangles represent the current yield. A second useful tool is to compare the pass on between short-term and long-term bonds. Usually, a spread exists between these bonds, as longer-term bonds would have to offer higher yields to pay investors for inflation in future.

However, during certain periods, the passion could widen or thin beyond its normal range significantly. This can give rise to potential investments in either short-term or long-term bonds. Start to see the graph below. In this graph, the blue series represents the yield of the shortest bill while the red line signifies the yield of the longest bond available (which could be the 15-year, 20-season, or 30-season bond available at that time). The yellowish line symbolizes the spread between these 2 produces.

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As you can see, there is a range of between 1% and 3.5% where the spread usually fluctuates. However, in Sep 2006, the spread was negative. A review of the long- and short-term produces reveal that this was due to the short-term yield rising to meet up with the long-term yield. Such an anomaly is improbable to keep for long and the strategy is always to bet that the short-term produce would decline to its normal range. Hence, the strategy would be to buy short-term bonds.

Consider another example in Jun 2008 when the pass to reach the higher selection of 3.5%. Here, the rise in the spread was added both by a growth in long-term produce and a fall in short-term produce. The above are 2 useful tools for investment in SGS bonds. Hope they can help you in investing in SGS bonds!

Don’t complicate your finances more than necessary. So only join one or two cards. The fewer bank cards you own, the simpler it is to keep track of how much money you owe. If you consistently max out your credit cards, you could be flagged for irresponsible credit credit card usage. Banks and future loaners will see that as a sign that you’re either struggling to pay off your personal debt or are not very proficient at managing your finances. If they don’t think you’re a trustworthy investment, you could have a hard time getting loans in the foreseeable future.

Just like you shouldn’t max out your credit limitations, you should pay off your balance owing in full always. If you don’t have the funds, don’t spend it! Not all debts are the same. Believe it or not, there is certainly “good” debt just as there is certainly “bad” debts. Has lower rates of interest and is a good investment.

Mortgages are believed “good” debt, because the value of real estate will more often than not continue to increase. Has high interest rates and can be avoided. Credit card debt is an example of “bad” debt because rates of interest are often quite literally back-breaking and most things you get with a credit card can only depreciate over time.