What's your prediction on the Australian Dollar?

[Abdul_A350]

Only if you pay above face value

Bond prices - ASX

I think you mean 'below'. More you pay, lower the yield.

 

[medhead]

Saw a 2 bedroom unit in my favourite mining town advertised today for $17000. I was logged into my savings account to withdraw the money when I realised it was a mobile unit in the caravan park. Would've paid for the unit with the retained profit from the sale of a house in that same town at the height of the boom. (I do kinda fell sorry for the people who purchased) But also the mobile unit price of $17000 is roughly the pre-boom level.

 

[anat0l]

Not the Zimbabwean dollar our and Australian dollar has lost value !

If you spend your Australian dollar in Australia, unless we see dramatic increases in domestic prices, it's hard to conceive the notion of "lost value".

If you take those Aussie dollars overseas then your point is well noted.

 

[JohnK]

Only if you pay above face value

Bond prices - ASX

Back to the drawing board then.

 

[SponsorSFC]

I think you mean 'below'. More you pay, lower the yield.

Nope

Above Par Definition | Investopedia

[h=2]DEFINITION of 'Above Par'[/h]A term used to describe the price of a security when it is trading above its face value. A security usually trades at above par when its income distributions are higher than those of other instruments currently available in the market.

If an investor purchases a security above face value, he or she will incur a capital loss at maturity when it is redeemed for face value.

[h=2]BREAKING DOWN 'Above Par'[/h]For example, a 5-year bond with $1,000 face value that pays a coupon of 10% annually may trade closer to $1,168 if similar bond rates decline to 6%. This is because investors are willing to pay more for a higher coupon; thus, it is said to be trading above par.

In order to make its yield equal current market rates, the bond should trade at its present value.

 

[marki]

If you spend your Australian dollar in Australia, unless we see dramatic increases in domestic prices, it's hard to conceive the notion of "lost value".

If you take those Aussie dollars overseas then your point is well noted.

Yep agree with you however imports are relatively more expensive!! We import a lot as not much is manufactured in Oz.

 

[SponsorSFC]

Back to the drawing board then.

Lower risk = Lower returns

If you don't require access to the capital then a well diversified portfolio is gong to beat cash medium to long term. However you need to look at what return you need to achieve your goals, there is no sense chasing higher returns and loading up on risk if a more conservative option will give you a high probability of achieving your objectives.

Alternatively if you are living off your Super and require a return of 6-7% pa then a conservative option may do just as much damage as you are effectively guaranteeing a shortfall.

Whether you have the capacity to ca bear the risk to achieve your desired return should be a significant factor in your decision not just the risk/return itself.

 

[Abdul_A350]

Nope

Unless you are buying at auction, face value and par are not relevant.

If a bond is yielding 3% and you want to earn 4%, you can only do that by buying at a discount to market price. You have it the wrong way around.

 

[SponsorSFC]

Unless you are buying at auction, face value and par are not relevant.

If a bond is yielding 3% and you want to earn 4%, you can only do that by buying at a discount to market price. You have it the wrong way around.

I agree with what you are saying.

I was taking John's statement as obtaining the income from the investment like cash or a TD . If you want a bond that pays 4% income right now you will have to buy above par.

Obviously your total return will not be 4%, likewise a bond bought at a discount now is not going to pay anywhere near 4% income.

I guess I should have been clearer but it is Friday night.

 

[drron]

Not the Zimbabwean dollar our and Australian dollar has lost value !

Zimbabwe now uses the US dollar so it is not going down.
Plus I have put a floor under the Aussie at 70.34.Hasn't gone below that since I opened my USD account 3 weeks ago.

 

[cove]

Thanks for doing that drron. History can be harsh on all of us in foreign exchange markets.

 

[medhead]

I think someone should've opened their US dollar account at $1.

 

[Foreigner]

Yep agree with you however imports are relatively more expensive!! We import a lot as not much is manufactured in Oz.

Generally yes but when prices of imported goods or commodities go down, as for crude oil, the impact on the weaker AUD is not as big.

 

[drsmithy]

Because they can

Indeed.

Used to be banks did their jobs and assessed people's ability to pay, then loaned based on that risk. Now (well, for most of the last twenty-odd years) they just throw money at anyone with a heartbeat.

Probably 75% of the problem right there.

 

[anat0l]

Indeed.

Used to be banks did their jobs and assessed people's ability to pay, then loaned based on that risk. Now (well, for most of the last twenty-odd years) they just throw money at anyone with a heartbeat.

Probably 75% of the problem right there.

I think they are simply swinging between extremes. One finds they are either credit shy or credit trigger-happy. That affects loans and credit cards.

 

[JohnK]

Lower risk = Lower returns

If you don't require access to the capital then a well diversified portfolio is gong to beat cash medium to long term. However you need to look at what return you need to achieve your goals, there is no sense chasing higher returns and loading up on risk if a more conservative option will give you a high probability of achieving your objectives.

Think my superannuation is moderate growth. It will be interesting to see the results come end of June. If it is another negative year like 2008 and 2009 then that puts another spanner in the works.

My main goal with my own investments now is not capital growth. I want some sort of income stream. Rent does quite well for me now but the apartments are starting to get old in the tooth and when one of the stratas is talking about spending ~$120,000 on improvements divided between 8 owners I start to panic. That sort of money would almost bankrupt me. It is not the strata manager making that recommendation it is the other owners and I would be clearly out voted but thankfully that amount is well beyond reasonable so they would need to budget to save the money over a period of time. I want to sell that apartment as it is depressing and I have lost interest.

I was thinking something like allocated pension or annuity would be a good option. Requires more research. Maybe buy some property in Thailand.

 

[Awesom Andy]

Think my superannuation is moderate growth. It will be interesting to see the results come end of June. If it is another negative year like 2008 and 2009 then that puts another spanner in the works.

IMO, I don't think that's too much of a concern unless you're planning to withdraw a large portion of it. If the plan is a gradual wind down over the next 5-10 years and beyond, a negative year generally isn't too much of an issue.

I'm also guessing that the apartment would have amassed some capital gains, so you might want some taxation advice on that as well as to when/how to get rid of it. Perhaps swapping it for a newer one might be the go, as long as rental yields and strata fees are similar.

 

[Flashback]

Think my superannuation is moderate growth. It will be interesting to see the results come end of June. If it is another negative year like 2008 and 2009 then that puts another spanner in the works.

My main goal with my own investments now is not capital growth. I want some sort of income stream. Rent does quite well for me now but the apartments are starting to get old in the tooth and when one of the stratas is talking about spending ~$120,000 on improvements divided between 8 owners I start to panic. That sort of money would almost bankrupt me. It is not the strata manager making that recommendation it is the other owners and I would be clearly out voted but thankfully that amount is well beyond reasonable so they would need to budget to save the money over a period of time. I want to sell that apartment as it is depressing and I have lost interest.

I was thinking something like allocated pension or annuity would be a good option. Requires more research. Maybe buy some property in Thailand.

No plan to retire to Thailand? Cheap living, makes your $$ go further. Have a reason to be there too...

 

[clifford]

Interesting article.

Battered banks poised to reveal whether a new crisis has begun | Business | The Guardian

 

[JohnK]

No plan to retire to Thailand? Cheap living, makes your $$ go further. Have a reason to be there too...

The exchange has killed that option but I never seriously considered that option.

Biggest concern is healthcare. Some of the medication I am on is really expensive. Plus once we are done with IVF the wife will be moving here.