ING Direct "No Load Bond Fund" earning 6% ... what's the catch?

[RossMAN]

I just called ING Direct's customer service regarding my savings account (shocking I know, I actually have a savings account where one deposits instead of withdraws money --- don't worry my AT account has not been hijacked) anyhow just as I was about to hang up the friendly CSR asks, would you be interested in one of our "No Load Bond Funds"?

I asked WTF?

He was only able to provide me with sparse information but said he would snail mail me a prospectus so I can look it over.

No minimum amount.
It's an investment, so it's NOT FDIC insured.
It was last earning 6%, probably 5.50% or 5.75% now.
It's conservative.
Not sure if there is a 1 month, 3 month, 6 month or 12 month committment (similiar to a CD).

INGDirect.com --> Learn More --> Investment Products

ING Direct Bond Fund

 

[glen]

The catch is you may be able to make more money in the Stock market than 6 percent.

 

[RossMAN]

Originally posted by: glen
The catch is you may be able to make more money in the Stock market than 6 percent.

Hmmn I wonder which is safer, I'd be content with earning 6% on a few hundred $.

 

[glen]

Wait a min, you work in the Financial industry, you know better than I do what your options are. What do you mean, "What is the catch?"

 

[RossMAN]

Originally posted by: glen
Wait a min, you work in the Financial industry, you know better than I do what your options are. What do you mean, "What is the catch?"

I worked in credit lending and now in international banking, investments are not my specialty.

 

[Ameesh]

there is no catch you can get bonds around 6% at any time

 

[freebee]

I'm earning just over 1.5% on about a 20 grand CD....prolly shoulda opted for something with a bit higher interest rate...but I'm poor and I need something with security. And I get free checking, a mastercard, etc. when I keep a 8 grand balance or something....

This seems like a good idea, I might have only 10 grand in cash left over to invest....but the only bonds I trust are govt bonds and they are fairly long term......

 

[Miramonti]

If you're talking about Bonds, there is no catch....

that's why they lost the series.

*rimshot*

 

[glen]

If stocks on average return 10% and Bonds return 6%, there is a 100% chance you will lose 4% investing in Bonds.
Generally, you should have some cash, some bonds, some stock, and maybe a REIT.

 

[kranky]

The "catch" (if you want to call it that) is that it is an investment that can fluctuate in price. The "6%" only means that based on the current price per share of the bond fund, the fund earns 6% in interest on the bonds it holds today. If interest rates go up, the price per share is likely to drop, and vice versa.

 

[BillGates]

I got my free $50 for opening an account with them and haven't gone back since withdrawing my booty, heh.

 

[Wduaqnug]

I just called ING and was told that its currently 5% that he will send me more info as well

 

[UNCjigga]

Originally posted by: RossMAN

Originally posted by: glen
Wait a min, you work in the Financial industry, you know better than I do what your options are. What do you mean, "What is the catch?"

I worked in credit lending and now in international banking, investments are not my specialty.

LOL you worked in credit lending...what did you do, lend to yourself? Were you your biggest client?

 

[Vic]

At this exact moment, the APY on the 30 year long bond is currently 5.021%

 

[RossMAN]

Originally posted by: uncJIGGA

Originally posted by: RossMAN

Originally posted by: glen
Wait a min, you work in the Financial industry, you know better than I do what your options are. What do you mean, "What is the catch?"

I worked in credit lending and now in international banking, investments are not my specialty.

LOL you worked in credit lending...what did you do, lend to yourself? Were you your biggest client?

No one in their right mind would approve me for a loan :Q but it has happened.

 

[alrocky]

Yes, it appears to be a conservative bond fund investing in primarily high grade coporate bonds and government securities. Essentially a government bond fund similar to my government Thrift Saving Plan (TPS) G fund which for the last 12 months (ending September) earned 5.16%. Morningstar shows your bond (IDBOX) fund for their 1 year record at 4.65% and year to date at 5.65% At first glance there is nothing special about their bond fund but there is at least one thing to note. The online prospectus shows IDBOX's Expense Ratio is rather high at 1.00%. TIAA-CREF's Bond Plus fund (TIPBX) ER is only 0.30%. Morningstar shows TIPBX's 1 yr. and year to date returns at 6.59% and 8.06%, which is much higher than IDBOX's. You can store your money in IDBOX but there a better bond funds elsewhere.

 

[kherman]

Originally posted by: freebee
I'm earning just over 1.5% on about a 20 grand CD....prolly shoulda opted for something with a bit higher interest rate...but I'm poor and I need something with security. And I get free checking, a mastercard, etc. when I keep a 8 grand balance or something....

This seems like a good idea, I might have only 10 grand in cash left over to invest....but the only bonds I trust are govt bonds and they are fairly long term......

At 1.5% adjusted for inflation, your actually loosing money. Infaltion is about 3%. Do the math and see what the $20K is worth 20 years from now. You might want to pay the penalty and get out of that ASAP. Paying down your home is a bettter investment than that.

not trying to be a d1ck, jsut trying to help.

 

[kherman]

Short term, no loaded Bond Fund is better/safer.

long term, just buy stocks.

 

[denali]

What's the ticker symbol and I'll tell you why it's paying so much. I looked at a few ING bond funds and most of the had very high fees/costs.

 

[freebee]

Originally posted by: kherman

Originally posted by: freebee
I'm earning just over 1.5% on about a 20 grand CD....prolly shoulda opted for something with a bit higher interest rate...but I'm poor and I need something with security. And I get free checking, a mastercard, etc. when I keep a 8 grand balance or something....

This seems like a good idea, I might have only 10 grand in cash left over to invest....but the only bonds I trust are govt bonds and they are fairly long term......

At 1.5% adjusted for inflation, your actually loosing money. Infaltion is about 3%. Do the math and see what the $20K is worth 20 years from now. You might want to pay the penalty and get out of that ASAP. Paying down your home is a bettter investment than that.

not trying to be a d1ck, jsut trying to help.

But there are no other ways in which to put 20-30 grand worth of cash for a short period of time...i don't have a house yet, (live at home)...and I don't want to lock it up for 4,5 years. I AM going to be buying a house shortly...probably within the next 2 years...but I also have variable expenses which might include MBA tuition, unexpected emergencies etc. All my loans are paid off and this is only my first year outta college. I need security, not profits.....

 

[alrocky]

Originally posted by: denali
What's the ticker symbol and I'll tell you why it's paying so much. I looked at a few ING bond funds and most of the had very high fees/costs.

In my prior post: IDBOX

 

[LordThing]

All this stuff just makes me feel SO stupid. I need to get into investing and have started doing some research, but I feel like I will end up being another sucker.

 

[Mister T]

Originally posted by: freebee

Originally posted by: kherman

Originally posted by: freebee
I'm earning just over 1.5% on about a 20 grand CD....prolly shoulda opted for something with a bit higher interest rate...but I'm poor and I need something with security. And I get free checking, a mastercard, etc. when I keep a 8 grand balance or something....

This seems like a good idea, I might have only 10 grand in cash left over to invest....but the only bonds I trust are govt bonds and they are fairly long term......

At 1.5% adjusted for inflation, your actually loosing money. Infaltion is about 3%. Do the math and see what the $20K is worth 20 years from now. You might want to pay the penalty and get out of that ASAP. Paying down your home is a bettter investment than that.

not trying to be a d1ck, jsut trying to help.

But there are no other ways in which to put 20-30 grand worth of cash for a short period of time...i don't have a house yet, (live at home)...and I don't want to lock it up for 4,5 years. I AM going to be buying a house shortly...probably within the next 2 years...but I also have variable expenses which might include MBA tuition, unexpected emergencies etc. All my loans are paid off and this is only my first year outta college. I need security, not profits.....

You should have put the money in an ING direct account... 2.75% and FDIC insured

 

[RossMAN]

LOL

I just logged on to check my ING Direct Orange Savings account referrals (gotta love $250 in FREE $) and saw this:

With no fees, your Orange Savings Account will never lose value. Plus, with our great rates your savings really grow! The higher your balance, the more you earn. Deposit more today by clicking here or on the Transfer Money tab above!

So does that mean if you deposit more $, you'll earn more $ in interest?

Wow!

 

[BigSmooth]

Originally posted by: RossMAN
LOL

I just logged on to check my ING Direct Orange Savings account referrals (gotta love $250 in FREE $) and saw this:

With no fees, your Orange Savings Account will never lose value. Plus, with our great rates your savings really grow! The higher your balance, the more you earn. Deposit more today by clicking here or on the Transfer Money tab above!

So does that mean if you deposit more $, you'll earn more $ in interest?

Wow!

ROFL, that's an AMAZING DEAL they've got going there!