Forum Archive Index - June 2001

["D & C Adams" <davida@wave.co.nz>]

The BNZ web site now has a bond trading area with the buy & sell prices .Go
into securities trading then to BNZ Bond direct .
Hope this helps

Dave
----- Original Message -----
From: <tennyson@caverock.net.nz>
To: <sharechat@sharechat.co.nz>
Sent: Thursday, June 14, 2001 6:22 AM
Subject: Re: [sharechat] Re: Bonds query


> >
> >With say 10 - $20K available to invest in
> >specific bonds (rather than mutual funds -I like to be a hands-on
> >learner), your site appears to imply that the (fixed?) brokerage
> >fees may be excessive. I haven't yet asked any brokers what they
> >charge - know any good ones for this purpose?
> >
> >
>
> I just approached my sharebroker at the time.  I think most
> sharebrokers will deal in the bond market.  The actual commission
> rate that the broker charged wasn't bad.  Certainly far less than you
> would pay for shares of equivalent value.   But all the broker did
> was ring up their bank for a quote.  And the bank, of course, had
> already tacked their own profit margin onto the quote.  So, in
> effect, you are paying double brokerage doing it this way.
>
> If you want to find out what the 'real' brokerage is try ringing up
> and asking for the 'buy' price for the bonds you want, and find out
> at the same time what you would receive if you 'sold' the bonds at
> the same time.  I think you will find that most banks will have a buy
> and a sell price for government bonds.   The difference between the
> buy and the sell price will be twice the brokerage you pay on one
> transaction (either buy or sell).
>
> I did try to bypass this process by approaching the bank directly,
> but they weren't interested in dealing with me direct on bonds, even
> though I was supposedly a loyal customer.   But do try your own bank
> first - you may have better clout than I did at the time!
>
> You should also know that in New Zealand, if you sell out of a bond,
> or you hold it to maturity, you are liable to pay income tax on
> any capital gain you make.  This can cut both ways as if you make a
> 'loss' on the capital value of your bond you must offset this loss
> against your income.  This is a requirement even if you
> are just a Mum and Dad casual investor.  This is different to the
> case of shares where for the Mums and Dads capital gains are tax free
> as long as you are not trading for a living.    So what I am saying
> here is that as a Mum and Dad investor you have a tax advantage over
> the managed share funds, but as a bond investor you have no tax
> advantage over the managed bond funds.
>
> >
> >I've since found www.investinginbonds.com very useful, but I suppose
> >I'm looking more for ongoing discussion on NZ/Aus bonds / yield
> >curve predictions etc in the manner of the share chatrooms. Maybe
> >there is less to talk about with bonds  - just keep an eye on
> >interest rates.
> >
>
> Bonds tend to respond to the 'general economy'.   To get a feel for
> it you should pay attention to what the Reserve bank and various
> senior bank   Economists say about long term interest rates, short
> term interest rates which way the yield curve is moving and all that
> stuff.  If you can anticipate the trends right you can make capital
> profits on bonds.   But it is hard to see how you can get any 'hot
> tips'' from chatrooms on this sort of macro behaviour.   And it is
> macroeconomic behaviour that drives bond values.
>
> For me it is too much hard work to try and outguess the
> pros and their bond funds which are trying to do exactly the same
> thing as you.  So for me bonds are a 'buy and hold' part of my
> investment portfolio.  But good luck to you if you can make a go of
> trading them. SNOOPY
>
>
>
>
>
> ---------------------------------
> Message sent by Snoopy
> e-mail  tennyson@caverock.net.nz
> on Pegasus Mail version 2.55
> ----------------------------------
> "You can tell me I'm wrong twice,
> but that still only makes me wrong once."
>
>
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