Blog 3- Bonds, Apple Bonds


In 2017, Apple sold $7billion in corporate bonds in order to raise funds, the question isn’t whether to invest in Apple it is whether to invest in bonds or stock? In order to answer this question you need to decide whether you are a safe investor or one that is willing to take risks. Bonds are a relatively safe bet usually, even more so in the case of Apple, Apple have enough cash reserves that if they stopped trading and didn’t make any more money today they would still be able to repay all the bonds sold. This is why if I was an investor I would invest my money into their bonds rather than  stocks. Stocks are volatile and react to the market and being a technology company which in itself is an ever changing market means that there are significantly higher risks to investing in stocks and shares. Apple are currently struggling in the Chinese markets because of companies such as Huawei who make cheaper alternatives to the iPhone, if this trend occurs in the UK and US markets their stocks and share prices will plummet leaving investors out of pocket. Therefore bonds would the safest way to invest especially as a first time investor.
Many would say that bonds are the safe option however being the safe option the benefits aren’t as rewarding right? Wrong; there are many type of bonds not just fixed rate, floating rate bonds which apple are offering allows investors the safety of a bond but the rewards of shares as the investment will be returned with a changing rate depending on how apple are performing. Therefore, if Apple continue to dominate the technology industry like they have been doing then the rate of return will be considerably higher than if you invested in a fixed rate bond. If you are a first time investor I would recommend sticking with a short term fixed rate bond it’s safe, and it’s easy to work out exactly what return you will be getting on your investment. For those who are more investment savvy but are concerned about the recent arrival of Huawei into the smartphone market of the USA and UK as well as the resurgence of Samsung and android phones, then the floating rate bonds Apple are offering are definitely the way to go. Longer term bonds are slightly more risky especially in the technological markets as technology is changing faster than we can understand therefore with a longer term bond I would be unsure into what I was investing into, with the possibilities of technology endless Apple may not be the technology giant it is now, in 20 + years.
Investing in shares and bonds is tricky business, as I have said in a previous blog,  shares and stocks are unpredictable and one piece of news could mean all of your investment is gone. I think that as an investor Apple is probably the safest company currently to invest in whichever way you choose to invest, however who knows what  can happen in the future and that is why bonds are the best way in my opinion to invest whether that be short term or long term the choice is yours, however you invest, invest wisely and you’ll succeed.

Comments

  1. Sophie WilsonJanuary 13, 2019 at 5:14 AM

    So would you say that in your opinion, you would always opt for investing in bonds for the best outcome? What about junk bonds, do you think they are a good investment because although they are risky they have high returns? Or would you steer clear of junk bonds?
    Looking back at what you learnt in lectures about bonds, was there anything you found particularly interesting or shocking, that you didn't already know?

    ReplyDelete
  2. LaurenjadeJanuary 14, 2019 at 12:35 AM

    I would not always opt for bonds but the majority of the time I would, in my opinion the bonds that Apple is offering would be the best outcome. In terms of Junk Bonds it all depends on what type of investor you are and who you are investing in, for me though I would try to avoid risky investments however some investors love to take risks. The high returns are very appealing but I believe they are too risky and that there are safer investments to be made.
    Looking back at what I have learnt I was interested to learn about the different types of bonds , before the lectures I did not even know what a bond was and therefore the whole learning process has been an eye opener.

    ReplyDelete

Post a Comment

Popular posts from this blog

Blog 5- Wall Street (1987)

Although Wall Street is a film and has therefore been made for drama and to entertain the audiences, it is a perfect example of how insider trading works. Charlie Sheen, who plays Bud Fox, begins the film by sharing the smallest piece of information about the company his father works for, however this information has not been made public and he therefore has given away insider information, which is illegal. Bud Fox then gets the job with the company he wants as long as he gets important insider information that would benefit them, in the end he made an awful lot of money from trading inside information. Even though this is a film I believe that it shows in depth what insider trading can do to those involved and affected by it, Buds own father suffers because of his insider trading. . What exactly is insider trading? Insider trading is the use of confidential information that is not yet in the public domain which allows the person an advantage, whether that be buying or selling shar...
Read more

Blog 1 - Netflix versus Blockbuster- value management showdown

Image
Value management is vital for any business, especially those whose main aim is to maximise shareholder wealth. Also value management is often  the difference between succeeding and failing and in business the line that distinguishes that is a very small one.  A company that has been succeeding In  creating value is everyone’s favourite streaming service Netflix, while these days they are famous for their streaming they originally started off as a DVD by mail company in 1997, and remember blockbuster? They had the opportunity to acquire Netflix back in 2000. Netflix was not always as successful as it is now and in 2001 following the 9/11 terrorist attacks Netflix were forced to sell there shares on the public market a decision that has since added a lot of value and extra cash flow to the company. Fast forward to 2011 and the real shareholder wealth maximisation comes into play. Netflix decided to split there streaming and DVD by mail services, charging $7.99 each, al...
Read more