4 ms·

> there is far more risk involved in buying these bonds than a savings account Please forgive my ignorance on this. I think there is a high potential that Sola

> there is far more risk involved in buying these bonds than a savings account Please forgive my ignorance on this. I think there is a high potential that SolarCity will do well after merging with Tesla so I see these bonds returning good returns.

forgetsusername 10y ago
>so I see these bonds returning good returns. Then why offer interest rates many multiples higher than other low-risk investments? Of course they might pay off (in fact, it's probable that they will). But it certainly isn't riskfree, like a savings account.
j7ake 10y ago
These statements need to be backed with skin in the game. How much are you willing to invest in these bonds? Would you transfer your current savings account all into these bonds? These bonds are medium risk... you get all of the downsides of when they go bankrupt but none of the upsides of if they become wildly successful.
mattkrause 10y ago
But...they're bonds. If everything goes absolutely swimmingly, you will not make more than 6.5 percent on your investment. They're not going to give the bondholders a tip/bonus/whatever. If you believe that Tesla + SolarCity is going to be a powerhouse, I'd consider buying the stock instead. Alternately, if you're looking for a 6.5 percent return, there are less risky ways to get it (it's about the expected annual return from a broad index fund). I'm honestly not sure who these bonds make much sense for. The implied bet is something like "they're not going to do great, so the stock will not rise, but they also will not go bankrupt so I will get my principal back." On the other hand, if you are emotionally invested in the idea of self-driving solar powered electric cars and are willing to tie up some money to make that dream come true...I can see the appeal. (I own a tiny bit of TSLA for the same reason).

4 ms·

> there is far more risk involved in buying these bonds than a savings account Please forgive my ignorance on this. I think there is a high potential that Sola

by mandeepj 10y ago

forgetsusername 10y ago
>so I see these bonds returning good returns. Then why offer interest rates many multiples higher than other low-risk investments? Of course they might pay off (in fact, it's probable that they will). But it certainly isn't riskfree, like a savings account.
j7ake 10y ago
These statements need to be backed with skin in the game. How much are you willing to invest in these bonds? Would you transfer your current savings account all into these bonds? These bonds are medium risk... you get all of the downsides of when they go bankrupt but none of the upsides of if they become wildly successful.
mattkrause 10y ago
But...they're bonds. If everything goes absolutely swimmingly, you will not make more than 6.5 percent on your investment. They're not going to give the bondholders a tip/bonus/whatever. If you believe that Tesla + SolarCity is going to be a powerhouse, I'd consider buying the stock instead. Alternately, if you're looking for a 6.5 percent return, there are less risky ways to get it (it's about the expected annual return from a broad index fund). I'm honestly not sure who these bonds make much sense for. The implied bet is something like "they're not going to do great, so the stock will not rise, but they also will not go bankrupt so I will get my principal back." On the other hand, if you are emotionally invested in the idea of self-driving solar powered electric cars and are willing to tie up some money to make that dream come true...I can see the appeal. (I own a tiny bit of TSLA for the same reason).