June 29, 2012

Why Your Financial Guy Won't Sell Your Bonds

With current yields on bonds at record lows which translates to record high prices for bonds, you are probably wondering why not sell and take a profit?  Why your financial guy won't sell your bonds?

Let me tell you why.  Bottom line is that most stockbrokers or financial advisors get paid via fees nowadays as opposed to commissions.  They get paid for money that is invested.  If they sell your bonds and go to cash, then they do not get paid at all.
the bond bubble of 2012 is about to burst!

Cash on your stockbrokers books is useless to them which is why you are arm twisted to be fully invested all the time, whether it is stocks or bonds or mutual funds or ETFs or insurance.

Remember that in order to collect the wrap fee, you, the client, must be invested in something and cash does not count, after all, no one is stupid enough to pay a fee for someone to watch their cash!

Do yourself a favor and learn to invest for yourself and by yourself and put the person who cares the most about your money in charge of it - you.

You can start by selling your bonds or bond funds for a profit now, sit on cash and wait for the bubble to burst and then you can buy it all back later when they yielding something more reasonable.

2 comments:

  1. My financial guy always had me fully invested claiming you cant time the market. I knew there had to be more to it. Now I know.

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  2. Travis - unfortunately, that is more common than people think. When you get paid by the amt of $$$ invested, there is a huge conflict of interest. I suggest learning all you can and invest by yourself for yourself.

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