I studied everything very thoroughly on TermMax—interest rates, tenors, liquidation lines. I checked every number, and in the end I still lost 41,000 u. The loss came from one thing I didn’t research: how long my own money would be unused.
At the time, I bought a 250,000 u, 6-month FT with a locked 13% rate. In the fifth month, my family needed the money. I couldn’t redeem the FT early—only transfer it. But for an FT that isn’t yet due, the transfer has to be discounted. I ended up getting about 8% less than face value, and 20,000 u was gone.
What’s even more painful is that when I looked back, the market interest rate during the same period had already risen to 18%. I was locked at 13%, so for the remaining one year I earned about another 21,000 u less. Add them up: 41,000 u.
I spent two weeks researching this project, but it took zero minutes to research “when I would need this money.” With fixed-income products, if you pick the wrong tenor, all the in-depth research in the world is useless.
Now, whenever I buy anything with a fixed term, my first step is to write down “how long I won’t need this money.” If I can’t write it out, I don’t buy. Interest rates are only the second part of the research—the tenor is the first.
@TermMax #TermMax
At the time, I bought a 250,000 u, 6-month FT with a locked 13% rate. In the fifth month, my family needed the money. I couldn’t redeem the FT early—only transfer it. But for an FT that isn’t yet due, the transfer has to be discounted. I ended up getting about 8% less than face value, and 20,000 u was gone.
What’s even more painful is that when I looked back, the market interest rate during the same period had already risen to 18%. I was locked at 13%, so for the remaining one year I earned about another 21,000 u less. Add them up: 41,000 u.
I spent two weeks researching this project, but it took zero minutes to research “when I would need this money.” With fixed-income products, if you pick the wrong tenor, all the in-depth research in the world is useless.
Now, whenever I buy anything with a fixed term, my first step is to write down “how long I won’t need this money.” If I can’t write it out, I don’t buy. Interest rates are only the second part of the research—the tenor is the first.
@TermMax #TermMax