what would you do with bond selling at premium

[rodeosweetheart]

Years ago when i read YMOYL I followed Joe's advice and bought Treasury bonds. Over the years, they have matured or are selling at premium. I sold several and started over with more face value and lower interest.

If you still had one, what would you do? It's got about 15 years left on it. It's trading at 32% over face value.

My long bonds that I buy now are timed to die right when I do, which is very sobering--now when I buy, I think--ok, this will last me the rest of my life. But the ones I bought in the spring are up, too.. .

Anyone else do this in response to the book, and what have you done over the years?

[jp1]

The premium over face simply reflects the present value of the future interest you will earn. In my opinion you might as well hold them, unless you need the money now. My father had bought a number of 30 year treasuries back in the early 80's when interest rates were in the double digits and held them to maturity a few years ago.

[rodeosweetheart]

Thanks, Jp1! A good perspective.

[bae]

If you don't need the capital for something, stick with your plan.

What else would you do with the money if you cashed them out?

[Rogar]

I'd probably hang onto it unless you have a better use for the money. If I have my bond theory right, if interest rates edge up people will be less willing to pay such a high premium and the cash value may not be quite so lucrative in the future. But I don't see interest rates making any big move in the near future. That was a sweet investment. I wish I'd given Joe's investment strategy more thought back then.

[rodeosweetheart]

I'd probably hang onto it unless you have a better use for the money. If I have my bond theory right, if interest rates edge up people will be less willing to pay such a high premium and the cash value may not be quite so lucrative in the future. But I don't see interest rates making any big move in the near future. That was a sweet investment. I wish I'd given Joe's investment strategy more thought back then.

Yes, it turned out to be excellent advice, one of the very helpful things I learned studying the book.

Bae, I don't need it now, so will just leave it alone. I sold the others and reinvested in more bonds are face value at lower interest and they have already risen 4-5%. But this one is kind of an intermediate bond now, so that's probably also a good thing, and it's not much money, anyway.

[bicyclist]

I think that it isn't the best time to buy bonds because prices are high. I feel that the odds favor an increase in long term interest rates which cause bond prices to fall. It could be quite awhile but bond prices are close to historical highs.Municipal bonds which I follow closely and own a lot of, are at a high level. I am inclined to buy more in order to receive more interest. The prices of the bonds are less of a concern for me.
You could make a good case for selling bonds at these prices but that does depend on your needs. I am holding bonds mainly for the interest they pay and I ma holding them for ten years or more, there's no better place for the money. Dave