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» Hatrack River Forum » Active Forums » Books, Films, Food and Culture » Possibly a stupid question.

   
Author Topic: Possibly a stupid question.
King of Men
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So I have some money that's just sitting around doing nothing. Is it possible for me to buy high-interest government bonds, in other words to lend money to, say, Greece or Ireland? I understand that the reason these governments are paying high interest rates is that there's a considerable risk of default, but I've already got some money in nice safe low-risk investments (I hope!) and I'd like to diversify a bit. So I guess my question is, how do people buy government bonds, anyway?
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fugu13
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High-interest government bonds are about the worst high risk investment right now, because both the exchange rate and the country's inherent riskiness will affect their long term returns. Honestly, if you want something high risk tied to specific locales, I'd just buy stocks of companies based in/with major activities in those areas. Or buy index funds that purchase a broad range of stocks from areas you're interested in.

If you still want to purchase the bonds, it seems that Ireland's bonds can be purchased on the Irish Stock Exchange. Your broker can probably hook you up, though there's going to be paperwork, probably. As for Iceland, do they have government bonds right now? I know they weren't issuing paper at the end of last year.

Out of curiosity, what's your current investment mix like? It'd probably be better for you to go for some mid-risk stuff rather than jump right in the deep end.

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Mucus
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One other option is to poke around some of the various bond ETFs
http://etf.about.com/od/bondetfs/a/List_of_International_Bond_ETFs.htm

You won't be able to focus on one country, but it could be fun anyways.

Probably not a good idea though.

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Geraine
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It depends on your age as well. If you are young I'd say mid-high risk investments would be fine. As you get older you will want to gradually transition to a more conservative portfolio.
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aspectre
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Become a currency speculator with only a $500 buy-in
http://marketplace.publicradio.org/display/web/2011/03/23/am-the-changing-role-of-the-dollar-in-international-business/

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King of Men
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quote:
Out of curiosity, what's your current investment mix like?
Your answer seems to assume a bit more sophistication than I actually possess - for example, I don't have a broker. What I've got is a 401(k) that I allocated (from memory) 20% to American bonds, 20% to international, 30% to American stocks, and 30% to international; I seem to recall that the stock thingies are index funds. Then I've got some money in Norway, and a Roth IRA.
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MrSquicky
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I'd suggest keeping away from direct bond purchases, which is going to be easy for you if you don't have a broker.

If you want to put the money to work but aren't that sophisticated, I'd look into mutual funds or ETFs. If you want to go that route, I'd suggest looking into Vanguard and picking one or more of their high risk funds. Keep away from any that have high management fees or, in nearly all cases, charge any upfront fees.

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Rawrain
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My suggestion is to stay away from all that paper bs.
Invest in Silver or Gold, the prices go up at a constant but slow rate, and even if the economy complete colapses they will still retain value especially Silver, due to its superior conductive quality and it's 'heavy metal'-anti-bacterial properties.

Downside is a silver or gold rush would drop the price, but if you pay close enough attention to world news you might be able to predict these events. "Miners explore Antartica for gold" something like that ._.

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King of Men
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quote:
even if the economy complete colapses they will still retain value especially Silver
Can I just point out that if the economy completely collapses, it is really quite unlikely that electronic IOUs redeemable in silver held in vaults on another continent will retain any value? If I wanted a hedge against total collapse, I would buy guns, canned food, and camping supplies. Not jewelry.

quote:
If you want to go that route, I'd suggest looking into Vanguard and picking one or more of their high risk funds.
Thanks, I'll have a look at this.
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fugu13
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quote:
Your answer seems to assume a bit more sophistication than I actually possess - for example, I don't have a broker. What I've got is a 401(k) that I allocated (from memory) 20% to American bonds, 20% to international, 30% to American stocks, and 30% to international; I seem to recall that the stock thingies are index funds. Then I've got some money in Norway, and a Roth IRA.
Okay, first of all, those bond fund investments are way too conservative. They've probably already cost you a good deal in returns, given the recent surge. You're not going to retire for a long time, so you don't need any bonds until you're at most ten or fifteen years away.

Index funds are definitely the way to go, though that doesn't necessarily mean low risk. For instance, some of my money is in a developing world index fund, which is quite volatile. Now, since it's an index fund, I'm not really risking losing the value entirely, as I would be in one or a small number of companies (or even one or a small number of countries). As MrSquicky says, make sure the funds have low expense ratios (definitely less than or equal to .35%, and you should be able to hit .2% or less on any S&P 500 index, which is probably where you have your American stock investments). Vanguard and Fidelity are both very good.

For more money to work, I wouldn't jump into bonds, funds or individual, I'd put money into riskier ETFs or mutual funds, like MrSquicky suggest. Keep focusing on low fees, and I suggest focusing on areas that aren't well covered by your existing holdings. Perhaps particular regions of the world (I have a SE Asia index fund as well, as an example) or sectors of the economy. That will get you some additional risk exposure without going off the scale, and will help balance the gains in your portfolio.

Rawrain: gold or silver would be possibly the worst investments right now. They've increased a huge amount recently (out of line with long term trends, unlike the stock market, and the stock market represents a continually growing set of value, unlike gold and silver), which is a reason not to buy. If the flight for quality reduces even a tad too much, prices will drop like a rock (or anything else without too much air resistance [Wink] ).

[ March 24, 2011, 02:44 PM: Message edited by: fugu13 ]

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fugu13
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Oh, and even if it doesn't get you access to a list of funds with the profiles you want, make sure the first thing you do is maximize any amount matched by your employer. Also, you probably want to dump amounts in excess of that into a Roth IRA.
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King of Men
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quote:
make sure the first thing you do is maximize any amount matched by your employer.
Right, that one I've got.

quote:
amounts in excess of that into a Roth IRA.
Thinking about it, this is probably my best next step, rather than faffing about with setting up new things.
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Bokonon
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fugu, I know about Expense ratios, but I work for small to moderate sized companies (100-500 employees), and my 401k offerings have never had a plan lower than .5-.8.

Any ideas of what to do?

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fugu13
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Lobby your company to change who they do their 401k through [Wink] .

If you're getting matching, then it's still worth it even with ridiculous expense ratios for index funds like that, up to the level of matching. But for amounts above matching, open a Roth IRA with your bank or somewhere and drop the money in some much more attractive funds. You can pick up .18% expense ratios on S&P 500 funds no problem, and someone who invests an equal amount in that vs a .5% expense ratio will have a substantial amount more money over twenty or thirty years.

Out of curiosity, who provides the fund options for your company?

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Jenny Gardener
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What about investing in land, and guns to defend it? Also, stockpiles of nonperishable food. Money, in the long run, isn't as helpful as the ability to feed and defend yourself. Then again, if you end up buying Greece or Ireland, that's a hecka lot of land and weaponry AND a ready populace to help you defend it. Hmmm...are you trying to Take Over the World?
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Stephan
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If I had extra money I would buy real estate.
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fugu13
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quote:
If I had extra money I would buy real estate.
If real estate fund prices head upwards at any reasonable clip, it is virtually assured stock market prices will be heading upwards faster. If you mean more direct investment, that's an awful lot of hassle for a retirement fund.
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Wingracer
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Buy guns, hire highly experienced mercs to train men in their use, send it all to Africa, become a prosperous warlord.
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Rawrain
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quote:
Originally posted by Stephan:
If I had extra money I would buy real estate.

Land is substance, its the most valuable non-renewable resource.

Why is everyone so intuned with buying pieces of paper with a value based on how well whatever company you're buying from is doing, is entirely unrealible.

As far as I am concerned land is priceless.

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King of Men
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quote:
Originally posted by Wingracer:
Buy guns, hire highly experienced mercs to train men in their use, send it all to Africa, become a prosperous warlord.

What do I do when my highly experienced mercenaries decide that they want a better retirement option?

If I wanted to become a soldier of fortune in this manner, I would first of all provide my men with a cause. Men who will fight for money and nothing else are actually quite rare, and not very reliable. Most mercenaries have some sort of commitment to the side they fight for, but are too poor to join the army for free.

Of course, given the situation in Africa, a cause might not be hard to come up with. "We're fighting to impose some damn order on this place and stop genital mutilation" should attract quite a few recruits.

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King of Men
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quote:
Originally posted by Rawrain:
quote:
Originally posted by Stephan:
If I had extra money I would buy real estate.

Why is everyone so intuned with buying pieces of paper with a value based on how well whatever company you're buying from is doing, is entirely unrealible.
In the end, anything you cannot personally defend with a gun in hand and the support of your immediate family (and a militia of neighbours if you are lucky) is "a piece of paper". And there are very sharp limits to how much ammunition you can personally fire off before someone gets in the lucky shot and kills you.
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Wingracer
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quote:
Originally posted by King of Men:
quote:
Originally posted by Wingracer:
Buy guns, hire highly experienced mercs to train men in their use, send it all to Africa, become a prosperous warlord.

What do I do when my highly experienced mercenaries decide that they want a better retirement option?

If I wanted to become a soldier of fortune in this manner, I would first of all provide my men with a cause. Men who will fight for money and nothing else are actually quite rare, and not very reliable. Most mercenaries have some sort of commitment to the side they fight for, but are too poor to join the army for free.

Of course, given the situation in Africa, a cause might not be hard to come up with. "We're fighting to impose some damn order on this place and stop genital mutilation" should attract quite a few recruits.

You are only hiring a few mercs to train your men. As for your men, you get a bunch of locals to rally to your flag in just the way you described but you need someone that knows what they are doing to train and lead them.
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Lyrhawn
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quote:
Originally posted by King of Men:
quote:
even if the economy complete colapses they will still retain value especially Silver
Can I just point out that if the economy completely collapses, it is really quite unlikely that electronic IOUs redeemable in silver held in vaults on another continent will retain any value? If I wanted a hedge against total collapse, I would buy guns, canned food, and camping supplies. Not jewelry.

quote:
If you want to go that route, I'd suggest looking into Vanguard and picking one or more of their high risk funds.
Thanks, I'll have a look at this.

Actually in that scenario, I'd want to own a farm with a decent sized distillery on the premises. When the New World Order comes, liquor will still count as currency.
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jammerchell
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First when I started my hobby of metal detecting, I do not know that there is a device called gold metal detector that can help me to have easier access to the gold metal and helps me sava time, then one of my friends told me about this device, I am so curious and want to find a good equippment to help me so I search the internet and find the one that I am satisfied with at (Link Removed) and by now everything goes on well and I have find some gold coins by using such kind of gold metal detector.

[ October 23, 2012, 11:28 AM: Message edited by: JanitorBlade ]

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Bella Bee
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It's sava time, everyone.

jammerchell: curious in more ways than one.

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AchillesHeel
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Oppa sava time.
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King of Men
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In case anyone is curious, I ended up getting an account with Vanguard, to which I'm now making weekly contributions. (That's in addition to my 401k contributions, of course.) I've got it split between three stock indices - S%P 500, small-cap, and foreign. Then, separately from that, my wife and I are saving for a mortgage downpayment, but that we've got in a bond index since the time horizon is much smaller.
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Stone_Wolf_
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quote:
Originally posted by King of Men:
So I have some money that's just sitting around doing nothing.

Man I wish I had this problem!
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Samprimary
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Remember to invest in gold and silver guys, because the fiat currency market will implode and create worthless currency! And by then everyone will be looking to take bars of shiny metal in exchange for food and clothing and batteries and fuel, right? I mean, the entire economy ground to a halt, which makes my metal hunks useful right?
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Rakeesh
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I judge how authentic an economy-collapse worrier is by how much gasoline and wet wipes they collect.
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Dan_Frank
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Rakeesh: They may be authentic, but they'd be uneducated.

Gasoline has a surprisingly short shelf-life. Stockpiling it isn't going to be terribly useful.

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ElJay
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I have 5000 gallons of diesel.
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Dan_Frank
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I... what?

Though, I'm not sure, but I think diesel has a better shelf life. So you've got that working in your favor.

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Blayne Bradley
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I would presume that investing in government is fairly solid because the government can always print money/bail themselves out, so just buy bonds when the price dips during bankruptcy proceedings and then once Greece rebounds you'll make money.
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Stone_Wolf_
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I judge how authentic an economy-collapse worrier is by how much ammo and water purification tabs they collect.
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King of Men
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quote:
fairly solid because the government can always print money/bail themselves out
Well yes, but if they do that, the real purchasing power of what you're repaid in drops. I mean fine, you can generally rely on getting your 1000 drachma back, plus interest; absolutely. (Although let's note that plain straight-out defaults do happen, where you actually get back 500 drachma.) The question is whether that buys a bag of oranges like it did when you invested, or a used piece of chewing gum. I mean, if you had invested in Zimbabwean bonds in 2001, you absolutely and totally would have gotten back 1 Zimbabwean dollar per Zimbabwean dollar you invested. No question about it. But I hope you didn't sink your retirement savings into that.
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