Thank you Janbjarne for the recommendation on debentures. I am not familiar wih this investment vehicle. hat are the risks on these other than the credit risk? tks
The credit risk for many convertible debentures is considerable. Most are issued by income trusts, which are inherently strapped for capital. So many debentures were down dramatically in the fall when it was impossible to raise capital. If the company defaults, the debenture could be worthless. If the company is still listed when the debenture matures, the debenture may be paid out in trust units rather than cash, so it is much safer than holding the income trust units themselves. The stability of the company is key.
As with all bonds, there is interest rate risk. Rates go up, bonds go down. I would stick to maturities below 5 years.
To TOJO:
Some of the more stable would be LIQ, PRQ, BNP or RSI. For potential capital gain, but higher risk HTE or ENT. I am not recommending anything.
Incidentally, the BAM bond issue was available in minimum $5000 investment. I asked for $10,000 and was lucky to get $6000. It now trades at a significant premium.