This is very good news for local retirees and investors generally, as it opens the door for them to the largest investment market in Australia – that of Bonds!
It is very unfortunate that Australians generally don’t understand the enormous benefits of having bonds in their Superannuation Funds or investment portfolios.
In this country, the overwhelming focus for investors has been the equity market and of course property.
This is in direct contrast to what happens in the major global markets of North America and Europe. Bonds in these jurisdictions dominate the investment scene and equities run a distant second.
With almost 20 years history in the Australian bond market, FIIG Securities facilitates access to both the Australian and global bond markets, so that investors can buy a wide variety of bonds to suit their cash flow and income needs - deriving comfort from low risk, low volatility bonds with high capital security.
There are hundreds of financial institutions and corporations that issue bonds, many of them household names like the banks and ASX-listed companies. There are also numerous smaller companies with very strong businesses that issue bonds – many of these are also very well known throughout the country.
Returns range from 4.00%pa right through to 8.00%pa with known fixed and floating rate coupon (interest) payments that you can rely and budget on. These are paid each 6 months (for fixed rate bonds) or each 3 months (for floating rate bonds), some are even paid monthly.
Whereas with shares, dividends can be cut or even halted without reference to shareholders (ie BHP, Telstra, some banks etc), coupon payments on bonds are legally binding obligations and cannot usually be reduced or suspended without triggering an event of default by the issuer of the bond.
This is why bonds are an important asset for any type of investor who wants to know exactly what his/her regular investment income will be.
The other wonderful feature of a bond is of course capital preservation. When you buy a bond, you know what its Maturity Date will be and how much income you will earn from it.
On the maturity date, the investor will receive back the face value of the bond as it was when it was originally purchased.
So for example if you buy a $100,000 fixed rate 5-year bond with a 6.50% coupon and you buy it at a capital price of $100 (called the “par” value), then in 5 years-time you will get back your $100,000
plus along the way you will earn 6.50% every year (paid in 2 equal 6-monthly instalments) – giving you total cash flow for the period of $32,500 At FIIG Securities, we construct diversified bond portfolios for wholesale investors starting with a minimum investment of $250,000.
We work closely not only with private clients but also a vast range of investment organizations and entities to help them achieve the investment returns they need.
As a person involved with the Yacht Club here in Mornington, we would love to discuss this with you if you are interested in reducing the risk in your Super Fund or investment portfolio generally.
Don’t let the volatility of the equity market impact the value of your investments – you’ve worked hard during your life to build your wealth so you can enjoy the future. Risk-taking now is not necessary when strong returns from the safety of bonds can achieve the results you need to maintain that lifestyle you want to have.
I would love the opportunity to meet with you and discuss how the world of bonds can bring you the comforting investment solutions you require.
Our primary office is located at 120 Collins Street in the CBD, however I would welcome you to visit our very small representative office at 7/234 Main St in the Vale Arcade. I am in the office on Mondays and Tuesdays but am available on the phone at any time.
I look forward to catching up for a chat.
Phone: 0403 354918