Who Else is buying the Convertable Bond?

[Clprenz]

I am putting about 15% of our IRA into the Convertable bond.
Is anyone else buying into it? Is this a good decision?
Any thoughts are welcome!
My reasoning:
The current stock price is very high, we all know that. I don't want to risk my parents retirement because the market re corrects violently and Tesla goes back down to $90

 

[DaveT]

I am putting about 15% of our IRA into the Convertable bond.
Is anyone else buying into it? Is this a good decision?
Any thoughts are welcome!
My reasoning:
The current stock price is very high, we all know that. I don't want to risk my parents retirement because the market re corrects violently and Tesla goes back down to $90

Can you share how you're going about purchasing the convertible notes? (ie., which broker, costs, etc)

 

[Clprenz]

Can you share how you're going about purchasing the convertible notes? (ie., which broker, costs, etc)

We are doing it through a Broker. That is where we hold the safe money. I have my E*trade to make the risky Tesla Plays.
Just our local broker (Kingston Financial Group)

 

[Cal1]

Why the convertible? Do you know the interest rate? Conversion ration or price, is it callable, putable? Perhaps we should discuss what convertible are actually designed to do.

 

[Causalien]

I have some safe money in my TFSA that I want to deploy. Still trying to find a broker in Canada that can handle this. Doing this while traveling in another country is not really easy.

 

[Clprenz]

Update, just before the broker made the transaction. Couldn't ... Not allowed in our account type or something. Looking into other things, looks like this debt stuff is really only for the big guys
the interest rate was 1.25% for 2021 at a conversion of 2.7788 shares 42% mark up

 

[Cal1]

Wow, I love my common, buy a lot of debt and this is crazy. 1.25% is very low and the markup makes this even more complex. Most convertibles have a set conversion price or ratio, say 40:1. This means that if you convert,for every one bond you have you can convert to 40 shares of common. The basic idea of convertible is giving an investor an income vehicle with the security of a debt position (they pay you before common gets anything in the case of dissolution). And then the upside potential of converting if the common goes way up. This mark up feature is going to really reduce the number of shares you get on conversion. Again much less straight forward than typical convertibles. The ability to convert to cash is not the typical object in convertible securities trading. The whole point of buying convertible is to have the ability to get some common at some point in the future and still get some income while waiting.