Not only the investment of savings can be channeled through equities. There are other financial products that can be receptive to your operations in the markets. Notable among which are bonds, among other financial assets. They can be national or corporate or even within the national investment, bonds of the autonomous communities, better known as patriotic. In any case, it can become an alternative for investment for this year that is about to begin.
But one of the questions that you will ask yourself at this precise moment is whether it is a good time to opt for the bonuses. Whatever its nature and contracting conditions. Well, it seems that it is not the best time to open positions in this financial product of such special relevance. For a series of reasons that we will explain below. So that in this way, you have all the keys about whether It is convenient for you or not to subscribe it in the current context in which the international economy develops.
In any case, you should know that positioning yourself in bonds is getting into fixed income. With all the characteristics that this kind of investment entails, so far so popular with the most conservative profiles. With a profitability that can vary depending on many variables of the economy: inflation, economic growth, debt, etc. Until a few months ago it generated a average annual profitability around 4%. Although their differences depend on the kind of bonds you hire.
Bonds: What Are Analysts Saying?
Experts in the financial markets are not very keen on boosting this investment over the next few months. To the extent that some of them influence that this market can be the object of the bubble of a part of the fixed income. With a very important risk for all small and medium investors who are positioned in this important financial asset. If this were the case, do not doubt that you would lose a very important part of your savings.
In the current circumstances, the recommendations of financial analysts go along the line that you have more to lose than to gain. To the point that they are much more likely to invest your money in the equity markets. With a much more important revaluation potential for 2017. In any case, much will depend on the bonds you subscribe. Not surprisingly, the German bund is not the same as peripherals such as Greece, Spain, Italy or Portugal, among others.
Another aspect that you should take into account from now on is that any profitability generated in previous years does not have to be repeated during 2017. Far from it, as you will see in this article. Everything seems to be aimed at opting for other investment strategies. Some of them are much safer so that you can more effectively protect your assets.
Return to an inflationary scenario?
One of the worst scenarios for the contracting of bonds is that inflation emerges in the main international countries. For a number of reasons that you can understand below. After a prolonged period of deflationAre we witnessing the return of inflation in the world economy? The indicators of this macroeconomic indicator seem to confirm this dangerous conjunctural scenario. At least it is rising in high-profile nations such as the UK, the US and Germany.
With regard to the United States, it should be noted that the results of the US presidential elections have been interpreted by financial markets as a new inflationary nod to investors. President-elect Donald Trump's program goes this way. With a notable increase in public spending, as one of his formulas to reactivate the North American economy. All a symptom of the inflationary trend that could reach the other side of the Atlantic as of this new year.
Bond market situation
The moment that these products are presented is one of more than relevant overvaluation. They will not generate the same return on savings as before. You even run the risk that it will go to negative levels. Or as some leading market analysts point out that burst the dreaded bubble of fixed income. And very specifically of state bonds. It is an alternative that you must provide to guarantee your savings. At least as one possibility of the many that can occur during this difficult year for the world of money.
With regard to corporate bonds, in the short term it may be more interesting to hire them. Always under maximum control in your positions. Not surprisingly, there are options that develop the Better opportunities in global fixed income markets. In any case, without losing sight of risk mitigation. With some investment options more interesting than others. It is those for which you should opt from the month of January.
You should also bear in mind that the German bond can act as a safe haven value in the worst moments of 2017. To take advantage of this very special situation, you will have no choice but to make a hole in your investment portfolio for this kind of investment so characteristic in the profiles of some small and medium investors. Above the US bond, which would be another of those that should have an improvement in the financial markets. Although the rate hike and the economic policies of Donald Trump can harm these objectives.
How can you act with the bonuses?
To develop your operations you have different strategies that can be very effective to make your savings profitable from now on. First of all, it will be very necessary that you apply them with great discipline. So that the alarms do not go off before any adverse scenario in the financial markets. Basically they will come from these actions that you will have to carry out to achieve the objectives in a more effective way.
- You must act with a lot of caution due to the bad omens that exist on this fixed income market. Without exposing yourself in excess in the economic contributions that you make in the open positions.
- You can combine this investment with other financial assets to protect your savings. The product that best reflects this trend are investment funds based on any kind of bonds.
- Do not go to very long periods of stay, but on the contrary the shorter the better. Within the natural terms in this class of financial products. You will avoid the worst scenarios that may arise during this year.
- Although it will be gradual, the monetary tightening of the Federal Reserve does not create an especially favorable background for the strong budget stimuli expected with the arrival of the new president of the United States, Donald Trump.
Very patriotic bonds
You also have a very original alternative that you can make effective during this new year that is going to be presented. It's all about the bonuses from the autonomous communities and that are popularly known as patriotic bonds. They are issued by territories such as the communities of Madrid, Catalonia, Galicia, the Basque Country, Murcia and Navarra, among many others. But they are governed by very well defined characteristics and that it is very necessary that you know. For no other purpose than to hire them, if this is your wish in the world of money.
The profitability offered by these regional public debt products is highly variable, depending on who are the issuers of these original and at the same time more unknown bonds. They oscillate between return between 1% and 6%. In many cases, they generate a higher interest than in conventional public debt. But in exchange for presenting greater risks. Because indeed, if these products are characterized by something, it is because they require greater stability. To the point that issuers cannot meet their deadlines.
As the risk increases, the profitability also increases proportionally. It is the toll fee that you must assume if you are in a position to contract any of these special bonds. That is why they are not highly recommended by the main financial agents. They are subscribed in alternative markets and can lead to losing part of your assets in the most unfavorable scenarios that these financial products can present.
Conclusions on bonds
Currently it is not one of the most valid proposals to defend your interests as small savers that you are. Offering more disadvantages than advantages. With less prospect of appreciation than before. It is now only an option to subscribe at certain times. But nothing beyond this strategy. Under the risk that the operations are not channeled as you wish. You have other more profitable alternatives, especially those derived from the equity markets.
In most of the proposals, it does not compensate for the subscription of most of the bonds. Whatever their nature and even the terms of permanence to which they are directed. In a range that ranges from one to five years. Although on the contrary, you can formalize them for very affordable amounts for most households. Practically from 1.000 euros for each issue. With the payment of your interest when it is due. As in most of the products linked to fixed income.