oliverdon:
Fidelity secondary @364 is 8perc closes 1pm

zohan101:
Good day everyone..

So today i visited FBN quest asset managers at their IKoyi branch.

And i made enquiries on their FBN Bonds Fixed Income funds investment..

I was informed present interest rate is 16.04% , I was happy and almost signed up until I was informed that the interest rate isnt a constant for the entire bond tenure, rather it flauntuates..

I was also informed there is a possibility of my capital depreciating at the end of the bond tenure.(Rude awakening)

P.s Please Sir Emmanuel Ewelumi kindly help me out with understanding the risk aspect of my capital depreciating at the end of the tenure..Thanks alot sir.

dake40:
If care is not taken, this is the moment people will loose their capitals to fake/unsafe investments while finding alternative to TB.

Advice to investors, please research and ask questions before you invest your funds....

emmanuelewumi:



Please find out, why your capital can depreciate.
I think if you terminate the fund before certain period of time, you might lose part of your capital.

zohan101:

Exactly what I told the investment officer, That it ought to be only if one terminates b4 maturity but she said not only in such case..

She painted a scenario

That the current price of a bond is #1224..And if i purchase #20000 what of bond at #1224 gives 16.339 units..So if after holding for 3years or 5years and I decide to sell, its going to be subject to the price available as at that time, so if the price for a bond then is #1000..My capital gotten after the tenure will be #1000 x 16.339units=#16339(less than my startup capital of #20000)..


This was the illustration she gave..

It left me dumbfounded..Had to put a halt on investing..

emmanuelewumi:



I don't think you will lose capital if you hold till maturity.

You can buy FGN savings bonds and hold to maturity, by 2 to 3 years tenor

emmanuelewumi:



I don't think you will lose capital if you hold till maturity.

You can buy FGN savings bonds and hold to maturity, by 2 to 3 years tenor

zohan101:

Exactly what I told the investment officer, That it ought to be only if one terminates b4 maturity but she said not only in such case..

She painted a scenario

That the current price of a bond is #1224..And if i purchase #20000 what of bond at #1224 gives 16.339 units..So if after holding for 3years or 5years and I decide to sell, its going to be subject to the price available as at that time, so if the price for a bond then is #1000..My capital gotten after the tenure will be #1000 x 16.339units=#16339(less than my startup capital of #20000)..


This was the illustration she gave..

It left me dumbfounded..Had to put a halt on investing..

zohan101:

Exactly what I told the investment officer, That it ought to be only if one terminates b4 maturity but she said not only in such case..

She painted a scenario

That the current price of a bond is #1224..And if i purchase #20000 what of bond at #1224 gives 16.339 units..So if after holding for 3years or 5years and I decide to sell, its going to be subject to the price available as at that time, so if the price for a bond then is #1000..My capital gotten after the tenure will be #1000 x 16.339units=#16339(less than my startup capital of #20000)..


This was the illustration she gave..

It left me dumbfounded..Had to put a halt on investing..

igbizen:

This scenario you just narrated implies that you can only lose ur capital if you sell b4 maturity. As long as you hold till maturity you won’t lose your capital.

TotoNaRubber:
Bonds seems like a legal 419, you buy to make profit but the banks makes more money when you are buying and when you are selling.

The units thing is complicated, the interest rate is complicated, you won't really know when banks try to cheat you, sometimes you get paid 16% and sometimes you get paid 12%.

When you buy from sec market, you have to pay the seller some interests, is there anyone who has held bond to maturity to explain if it was worth it?

katamo:

Correct. If you hold until maturity you do not lose any capital.

Let me try to clarify a bit more since it seems people still have a lot of questions. If you sell before maturity there are three things that can happen:

1. If the interest rate for newly issued similar bonds with the same time until maturity is greater than the coupon rate on your bond you will sell each unit at a lower price than you bought

2. If the interest rate for newly issued similar bonds with the same time until maturity is lower than the coupon rate on your bond you will sell each unit at a high price than you bought

3. If the interest rate for newly issued similar bonds with the same time until maturity is equal to the coupon rate on your bond you will sell each unit at a the same price that you bought

The principle is that investors will demand a return that is consistent with what the rate of return the market dictates at any point in time. As an investor, if you can buy a new issuance of 3-yr FGN savings bond at a today's yield of 11.296% (which is the same as the coupon rate since it is a newly issued bond at par), you will pay less for a 10-yr bond with 3 years left to maturity that only pays a coupon of 8% (example 1 above). However, you will be willing to pay more for a 5-yr bond with 3 years left to maturity that pays a coupon of 16% (example 2 above). If the coupon rate on the secondary market bond at the time the bond is sold is equal to the yield (or current coupon on new FGN bonds) you will pay the same price as what you would pay for the new FGN bond (par) since in reality, the payment schedule will be exactly the same as that of a new issuance, that is they are identical from a financial perspective since you are getting the same scheduled interest payments and return of principal at maturity (example 3 above).

9jatriot:
Many of us who now hide in TB have had our hands burnt in the so called real sector. The problems there are mostly the fact that everyone wants to scam you. Then there is the unfriendly business environment. I think we are not as resilient as the Lebanesse, Indians and Chinese to succeed in hostile business environments.

emmanuelewumi:


I know Stanbic has a dollar fund, I think Jejebaba has one with them.

FBN Quest and United Capital are the two firms that I am very familiar with and they both have Eurobond funds.

CBN is trying hard to defend the Naira, I wish them the best concerning this

TotoNaRubber:
Bonds seems like a legal 419, you buy to make profit but the banks makes more money when you are buying and when you are selling.

The units thing is complicated, the interest rate is complicated, you won't really know when banks try to cheat you, sometimes you get paid 16% and sometimes you get paid 12%.

When you buy from sec market, you have to pay the seller some interests, is there anyone who has held bond to maturity to explain if it was worth it?

katamo:

Correct. If you hold until maturity you do not lose any capital.

Let me try to clarify a bit more since it seems people still have a lot of questions. If you sell before maturity there are three things that can happen:

1. If the interest rate for newly issued similar bonds with the same time until maturity is greater than the coupon rate on your bond you will sell each unit at a lower price than you bought

2. If the interest rate for newly issued similar bonds with the same time until maturity is lower than the coupon rate on your bond you will sell each unit at a high price than you bought

3. If the interest rate for newly issued similar bonds with the same time until maturity is equal to the coupon rate on your bond you will sell each unit at a the same price that you bought

The principle is that investors will demand a return that is consistent with what the rate of return the market dictates at any point in time. As an investor, if you can buy a new issuance of 3-yr FGN savings bond at a today's yield of 11.296% (which is the same as the coupon rate since it is a newly issued bond at par), you will pay less for a 10-yr bond with 3 years left to maturity that only pays a coupon of 8% (example 1 above). However, you will be willing to pay more for a 5-yr bond with 3 years left to maturity that pays a coupon of 16% (example 2 above). If the coupon rate on the secondary market bond at the time the bond is sold is equal to the yield (or current coupon on new FGN bonds) you will pay the same price as what you would pay for the new FGN bond (par) since in reality, the payment schedule will be exactly the same as that of a new issuance, that is they are identical from a financial perspective since you are getting the same scheduled interest payments and return of principal at maturity (example 3 above).

emmanuelewumi:

zohan101:
Thanks for your explanation Sir.

But please Can one roll over interest plus capital in bond investments just like it is with treasury bills?

ojesymsym:

How does one recover shared when the stock brokering company is no longer existing?
I bought ecobank shares in 2007 with quantum securities. Up till 2019 I have not seen any dividends from them. I tried shares again in 2012 using ecl as stock broker, now it looks like they have also gone out of the market. Is there a way to sell those shares? I'd rather a 1% TB that I can see than audio shares money.

TotoNaRubber:
Bonds seems like a legal 419, you buy to make profit but the banks makes more money when you are buying and when you are selling.

The units thing is complicated, the interest rate is complicated, you won't really know when banks try to cheat you, sometimes you get paid 16% and sometimes you get paid 12%.

When you buy from sec market, you have to pay the seller some interests, is there anyone who has held bond to maturity to explain if it was worth it?

ukay2:


My oga FGN Bonds do not in any where seem to be any legal 419 investment.
Rather it's your lack of understanding that is confusing you.
I have tried severally to explain to you .....but am sorry u still did not understand bond market calculation.

Maybe just try and invest 10k in 3 year bond and hold till maturity it will become clear to you.

I have FGN Bonds that have matured and still maturing in FEB 2020, APRIL 2037.
I have never loose my capital......rather keep getting the coupon payments at the said payment date.

Just hold till maturity....no capital will be loss or sell below the bond offer price before maturity and still make more money from it.
You will only loose some part of your capital when you sell before maturity at offer price above what you initially bought the bond.

Am talking from a practical point as bond investor that has hold till maturity.


Example

I have 12k to buy fgn bond for April 2037 at 16% coupon payments till maturity and I bought the bond for 12% from secondary market. That my 12k may bought me 10k what of the FGN bond since am buying it at 12% instead of the 16%.....meaning the person I bought it from has made 2k from me since his selling at a lower percentage which is 12% if he bought it at 16% from FGN from primary market. .....which I told you earlier that most bonds at primary market are not even sell at that 16% rather below that percentage.

Then I will be getting 16% of 10k bond for 17 years from FGN ...which is N1,600 every year for 17 years which is maturity date ......the FGN will be paying me N800 every 6 months till maturity.


For me after 3 coupon payments. ...which is N2,400....I have recovered the 2k I used to overpay for the bond

So the remaining N1, 600 x 15 years are my gain I hold till maturity (which is N24,000) and at maturity, my 10k I used to buy the bond will be repaid to my account so I have 24k+10k=34k in total.

If I start re-investing every coupon I get to buy the same 17year bond....my coupon payments will keep on increasing. ....you know compound interest.....you can calculate it yourself and know what that compound interest will be ...

If I even want to sell that FGN Bonds 2037 like by 2025 at 9%(below my purchase price of 12%), I will make more money from it because the person buying it from me will pay more to buy that remains bond from me..

If I decide to resale it by 2025 at 15% (above my purchase price of 12%), I will loose some funds from my initial capital.

But for me....like in my NTB investment. ...I hold all till maturity

Don't forget that the only charge your bank will get to help you purchase the bond like the NTB purchase too is (like my bank. ..stanbic. ...N300 for custodian fee + 0.05% of the nominal value of the bond like the example I gave 10k x the number of years of the bond.

I will advise people to buy the FGN Bonds via banks that will charge you 0.05% of your nominal value of the bond. ...because some investment houses charge as high as 0.5 or 1% which maybe too high


I just hope this explanation make sense to you and others so that the issue of bond calculation will be put to rest in this forum.


As NTB interest is low now and many NTB investor are looking for alternative investments, some investment houses or banks or people may even confuse you the more.

NSE is another place u can purchase your dividend paying stocks if you have a high risk appetite like me and others in this forum.

Just be guided in your investments

And may God help us not to be too greedy to loose more funds in time like this. Amen.

As I always say.....SLOW AND STEADY INVESTMENTS WIN THE RACE.

ojesymsym:

How does one recover shared when the stock brokering company is no longer existing?
I bought ecobank shares in 2007 with quantum securities. Up till 2019 I have not seen any dividends from them. I tried shares again in 2012 using ecl as stock broker, now it looks like they have also gone out of the market. Is there a way to sell those shares? I'd rather a 1% TB that I can see than audio shares money.

ukay2:

Example
That my 12k may bought me 10k what of the FGN bond since am buying it at 12% instead of the 16%.....meaning the person I bought it from has made 2k from me since his selling at a lower percentage which is 12% if he bought it at 16% from FGN from primary market. .....which I told you earlier that most bonds at primary market are not even sell at that 16% rather below that percentage.

Then I will be getting 16% of 10k bond for 17 years from FGN ...which is N1,600 every year for 17 years which is maturity date ......the FGN will be paying me N800 every 6 months till maturity.


For me after 3 coupon payments. ...which is N2,400....I have recovered the 2k I used to overpay for the bond

So the remaining N1, 600 x 15 years are my gain I hold till maturity (which is N24,000) and at maturity, my 10k I used to buy the bond will be repaid to my account so I have 24k+10k=34k in total.

If I start re-investing every coupon I get to buy the same 17year bond....my coupon payments will keep on increasing. ....you know compound interest.....you can calculate it yourself and know what that compound interest will be ...

If I even want to sell that FGN Bonds 2037 like by 2025 at 9%(below my purchase price of 12%), I will make more money from it because the person buying it from me will pay more to buy that remains bond from me..

If I decide to resale it by 2025 at 15% (above my purchase price of 12%), I will loose some funds from my initial capital.

But for me....like in my NTB investment. ...I hold all till maturity

Don't forget that the only charge your bank will get to help you purchase the bond like the NTB purchase too is (like my bank. ..stanbic. ...N300 for custodian fee + 0.05% of the nominal value of the bond like the example I gave 10k x the number of years of the bond.

I will advise people to buy the FGN Bonds via banks that will charge you 0.05% of your nominal value of the bond. ...because some investment houses charge as high as 0.5 or 1% which maybe too high


I just hope this explanation make sense to you and others so that the issue of bond calculation will be put to rest in this forum.


As NTB interest is low now and many NTB investor are looking for alternative investments, some investment houses or banks or people may even confuse you the more.

NSE is another place u can purchase your dividend paying stocks if you have a high risk appetite like me and others in this forum.

Just be guided in your investments

And may God help us not to be too greedy to loose more funds in time like this. Amen.

As I always say.....SLOW AND STEADY INVESTMENTS WIN THE RACE.

chigo4u:

6.2%? Really.
How is cbn gonna fight inflation now with the ban on OMO bills and low tbills rate while at the same time defending naira against dollar?
Economic wonders

emmanuelewumi:



Go to CSCS with your means of identification and evidence of having the shares.

Your shares will be transferred to another firm

ukay2:


My oga FGN Bonds do not in any where seem to be any legal 419 investment.
Rather it's your lack of understanding that is confusing you.
I have tried severally to explain to you .....but am sorry u still did not understand bond market calculation.

Maybe just try and invest 10k in 3 year bond and hold till maturity it will become clear to you.

I have FGN Bonds that have matured and still maturing in FEB 2020, APRIL 2037.
I have never loose my capital......rather keep getting the coupon payments at the said payment date.

Just hold till maturity....no capital will be loss or sell below the bond offer price before maturity and still make more money from it.
You will only loose some part of your capital when you sell before maturity at offer price above what you initially bought the bond.

Am talking from a practical point as bond investor that has hold till maturity.


Example

I have 12k to buy fgn bond for April 2037 at 16% coupon payments till maturity and I bought the bond for 12% from secondary market. That my 12k may bought me 10k what of the FGN bond since am buying it at 12% instead of the 16%.....meaning the person I bought it from has made 2k from me since his selling at a lower percentage which is 12% if he bought it at 16% from FGN from primary market. .....which I told you earlier that most bonds at primary market are not even sell at that 16% rather below that percentage.

Then I will be getting 16% of 10k bond for 17 years from FGN ...which is N1,600 every year for 17 years which is maturity date ......the FGN will be paying me N800 every 6 months till maturity.


For me after 3 coupon payments. ...which is N2,400....I have recovered the 2k I used to overpay for the bond

So the remaining N1, 600 x 15 years are my gain I hold till maturity (which is N24,000) and at maturity, my 10k I used to buy the bond will be repaid to my account so I have 24k+10k=34k in total.

If I start re-investing every coupon I get to buy the same 17year bond....my coupon payments will keep on increasing. ....you know compound interest.....you can calculate it yourself and know what that compound interest will be ...

If I even want to sell that FGN Bonds 2037 like by 2025 at 9%(below my purchase price of 12%), I will make more money from it because the person buying it from me will pay more to buy that remains bond from me..

If I decide to resale it by 2025 at 15% (above my purchase price of 12%), I will loose some funds from my initial capital.

But for me....like in my NTB investment. ...I hold all till maturity

Don't forget that the only charge your bank will get to help you purchase the bond like the NTB purchase too is (like my bank. ..stanbic. ...N300 for custodian fee + 0.05% of the nominal value of the bond like the example I gave 10k x the number of years of the bond.

I will advise people to buy the FGN Bonds via banks that will charge you 0.05% of your nominal value of the bond. ...because some investment houses charge as high as 0.5 or 1% which maybe too high


I just hope this explanation make sense to you and others so that the issue of bond calculation will be put to rest in this forum.


As NTB interest is low now and many NTB investor are looking for alternative investments, some investment houses or banks or people may even confuse you the more.

NSE is another place u can purchase your dividend paying stocks if you have a high risk appetite like me and others in this forum.

Just be guided in your investments

And may God help us not to be too greedy to loose more funds in time like this. Amen.

As I always say.....SLOW AND STEADY INVESTMENTS WIN THE RACE.

zamirikpo:
All this talk about bonds in not sweeting me at all.

Am in love with that upfront interest on TB, nothing beats that.

My anger is not even the 8-10% on TB it's the prorating.

As a business man I need to be liquid.....cant afford to lock down huge capital for 3-5 yrs(20m &above). When anything can come up.

Watching the market daily....TB it is