Opinions on best place to online invest.

[helmuth_hubener]

Sorry- you sounded like you were still a bit confused so I was just trying to help explain it.

Right, that's what I thought. Thanks!

 

[P3ter_Griffin]

The only online broker I've used is PennTrade, and I'd be willing to recommend them. The trading platform was nothing special, more designed for functionality, but it looks like its been upgraded since I last traded. Gives you access to US stocks plus TSX and TSX-V which are Canadian exchanges with oogles of gold/silver miners and other resource producers, big and small- plus lots of other good companies in different sectors. Trading Canadian stocks does require you to hold Canadian currency basically, so severe deflation could hurt possibly -over sitting in US$ that is-, but depreciation on the other hand would benefit you. At least the last time I traded, they do not have live charts- nor charts at all- as a free service for trading with them, maybe for extra $$ though?.

 

[Jordan]

I do not understand why you quoted my post and then posted this information. That makes it appear it is in reply to my post. But surely you read the whole post, right? Or did you just read that first sentence.

I guess you just read the first sentence and thought "Oh, he doesn't understand how bonds work. I will explain them to him." Well, thank you. You seem to be a helpful person. But if you will read my whole post, you will see that I understand exactly what he meant ("makes no sense was perhaps the wrong phrase to use), and understand how bonds work, and simply wanted to add the further consideration of real returns that Jordan may not have thought of.

Again, you and Jordan say you are guaranteed to get back a certain amount upon maturity. Nominally: yes. Really? No.

I would enjoy it if you replied to my reply to you, Zippyjuan.

I'm very aware of how bonds work, thanks. I was just offering up the advice that holding a bond fund, like a 20-year+ duration US Treasury ETF, can screw you in a rising rate environment because it constantly rolls over bonds into new and longer maturities. Thus, not a single one is held to maturity. Totally different concept.

A way to remove that risk is to buy a bond fund that holds bonds to maturity. But, because you just read my first sentence, decided it didn't make sense, and then ignored the one other sentence, only to write countless paragraphs and accuse another person of not reading more than one sentence of your post, you didn't pick up on what I was saying.

And yes, I understand the concept of real and nominal returns. My suggestion (buying a target maturity bond fund vs. rolling maturity) allows you to avoid nominal losses from interest rate flux.

 

[oyarde]

I would not fool with bonds unless they are held until maturity.

 

[helmuth_hubener]

I'm very aware of how bonds work, thanks. I was just offering up the advice that holding a bond fund, like a 20-year+ duration US Treasury ETF, can screw you in a rising rate environment because it constantly rolls over bonds into new and longer maturities.

Or it can put a very big smile on your face if rates go up. Right.

Thus, not a single one is held to maturity. Totally different concept.

Umm, I don't know that I'd use the word "totally," but certainly there are differences.

A way to remove that risk is to buy a bond fund that holds bonds to maturity.

The risk you have mentioned is the risk that interest rates will rise. Holding a bond to maturity does not remove that risk. Interest rates rising will still be very bad for the real return of your bond. The effect of rate changes will simply change over the lifetime of the bond. When it is very long til maturity, it will be affected very powerfully. As the duration shortens, the power of the bond to respond to rate changes lessens. When it becomes, say, a year out, it will, obviously, behave just exactly like a one-year bond.

But, because you just read my first sentence, decided it didn't make sense, and then ignored the one other sentence, only to write countless paragraphs and accuse another person of not reading more than one sentence of your post, you didn't pick up on what I was saying.

LOL, calm down my man! I was just telling Zippyjuan that I already knew what he was saying. Zippyjuan and I have interacted a bunch on investment topics lately, and we get along fine. It may have sounded mean to you, but whatever.

I read your post. I understand what you said. But I see the advice as worthless. Each year during your holding of the bond, you are holding a bond of a certain duration. Other than for tax purposes and transaction costs, it makes absolutely no difference whether you hold the bond to maturity, or whether each December you sell your bond and buy a new one with a duration one year less than the one you bought last year. Which begs the question: why did you think that 22 year bonds were the ideal length of bonds to have in 2002, 19 year bonds in 2005, 9 year bonds in 2015, etc.?

Doing this gradual reduction of bond term doesn't eliminate interest rate risk. It makes interest rate risk higher at the beginning of your investment and lower at the end. There may be good reasons for doing that, if you're about to retire or something, or if you are speculating that interest rates are going to go down in the near term, but then go up or be steady in the long term.

Perhaps there are other good reasons to hold a bond to maturity you have thought of which I have not. If so, I'd love you to tell us, so that I, and everyone else, can learn!

And yes, I understand the concept of real and nominal returns. My suggestion (buying a target maturity bond fund vs. rolling maturity) allows you to avoid nominal losses from interest rate flux.

I just really think nominal returns are so unimportant as to be virtually irrelevant. The only time it would matter is for taxes. Real returns are what matters. And so like I say: your advice makes no sense, to me personally.