Bond Investing 101–A Beginner's Guide to Bonds Most investors include bond ETFs or mutual funds in their portfolio. Yet do we …
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Bond Investing 101–A Beginner's Guide to Bonds Most investors include bond ETFs or mutual funds in their portfolio. Yet do we …
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50 comments
Always thought a lill stupid when people talked about bonds.
Your voice has a striking resemblance to Edward Snowden, like the intonation, the occasional “um”s, and this light smacking you sometimes do. In both cases, y’all sound professorial. Great video, and I’m learning a ton.
i dont understand the difference between SEC yield and YTM
It's like having knowledge directly downloaded into your brain
Thanks for the video. As usual, I learned something new. However, after all the detailed info you gave, I cannot understand why you think buying (or selling) individual bonds is difficult. Schwab (and I'm assuming other platforms) makes researching, buying, and selling individual bonds rather easy. And, if you stagger their maturities like CDs, you don't get hammered when rates go up like with BND. You hold until maturity (mostly), and you AT LEAST get your promised return. The only thing to know above what you said is the difference between yield and yield to worst, callable v. non-callable, how to read a simple bond report (free with Schwab…Moody's or S&P), and don't buy anything less than BBB/Baa2 (unless you're looking for higher yield and higher risk).
Rob, a terrific video. It was recorded 3 years ago but I hope you’re willing to answer questions.
I’m an ‘almost do it yourself investor’ but still use an advisor to run things by twice yearly. As a high earner , I’ve had muni bonds only in the brokerage account/not taxed federally or in our state. My advisor is suggesting to try to aim for higher returns as the yield doesn’t beat inflation. Would you avoid corporate/treasury/other bonds in the brokerage account as rule of thumb due to tax drag…? Even in view of relatively low returns for muni bonds vs inflation? Thank you
After listening to this lecture I still don't get why individual bonds are not the way to go?
With ETFs those bonds never mature 'cause the fund keeps buying new bonds to match the duration.
Is there a bond fund that's guaranteed to not lose money, but might not have the highest yield either?
Overly complicated
Confused still with maturity vs duration. You reach maturity before duration ? What does this mean ?? The rest I understand. Thanks.
No chapter for a one hour video ? Oh my god.
Excellent video. Learned a lot.
I have been loving your videos and have been watching them all of the time. I'm just starting to learn about bonds and right now am at around 99% stocks in my portfolio. With an account like Fidelity cash management SPAXX being at around 4.2%, what advantage would putting money in VGIT or BND with an expected yield of 3.5% over leaving it in cash getting 4.2% for now?
For my own behaviour, Ive found I like it better to screen for & and buy/sell individual T-Bill/Note/Bonds instead of Bonds ETFs which the price/yield can fluctuate.
At the moment(12/2024), you can get Notes/Bond with a 6-7% coupon rate.
Or, you could go the easier route and choose a Money Market Fund from your brokerage account, lower yield than the coupon rates but easier to manage.
Not really a case for bonds, you focus on etfs , I’m not any wiser ,
Investments are the roots of financial security; the deeper they grow, the stronger your future will be."
Its worse here, our economy is like a flailing fish, fighting for its life. The normal state of the U.S. economy is actually very bad. Because of this it goes into convulsive spasms fighting to grow any way it can out of desperation. Tricks, gimmicks, rule changes try to stimulate the economy and prevent it from falling but they only bring temporary relief to people since, when you factor in inflation we are declining.
Thank you for the video
So well explained! Thanks a lot
For GOVT (Total US Treasury Bond) is any advantage vs VGIT (Intermediate US Treasury Bond)? There is no too much historical data for both ETFs, but seems that GOVT is a bit more volatile. Otherwise both are very identical.
Always great
BND makes most sense to me
Thanks for sharing the knowledge. I learnt a lot. However, I am now a bit confused with viewing bonds as "safety" against total stock portfolio.
If interest rate going up is bad for bonds and consequently for companies so stocks won't go up either, where is the safety net? Aren't stocks and bonds supposed to react opposite to fed interest rates? Where am I going wrong in this?
This is probably gonna be a dumb question but here it goes:
When you have a portfolio of let’s say 60% stock and 40% bonds, and every paycheck you have $1000 every paycheck to invest.
Is that $1000 dollars going to be split up like $600 goes to stock purchase and $400 goes to buying 400 dollars worth of bonds? And for a 60/40 portfolio you are to do this every time you invest ?
Obviously I’m confused and probably over thinking. Thanks for any help
A lot of bonds video were made in 2021.
You know. Just before loosing 20% of it's value.
I think single bonds are the preferred approach as they guarantee you won’t make a loss. You might get a low return and get frustrated when you see better deals but having a ladder to cover a 2-3 year market issue would be better than a fund, your on a journey.
Can you explain the tax implications of different bonds and the strategy for buying various funds for taxable vs non-taxable accounts?
This guy knows his shit.
8/15/24: Rob, This video helped me get an understanding of bond investing that I haven’t found elsewhere. It appears that you created this video in early 2021, just before President Biden caused runaway inflation. Now in 2024, interest rates are finally expected to fall. Your video helped me to see how TIPS are really an insurance policy. I was wondering why anyone would risk a negative yield. Thanks so much! It would be great to do an update with current market conditions.
Great video I’ve learned more about bonds in this video than all the other ones I’ve watched combined.👏👏👏 one question though how could you have not seen that inflation was coming?🤔 nevertheless great video.👍
What is SEC yield?
After 37+ years in IT working for an inter-dealer brokerage whose clients are mostly the banks and primary dealers in US securities, your concepts are spot-on, but my goodness, your math lol. 😉
I’m 100% VTI
How do you feel about 80/20 vtsax and vtblx for fat fire?
But in a etf or you stack your self with dollar cost averaging you don’t really have that problem especially when you do short term bonds. I use VEMT etf. Government emerging market bonds and VUTY usd government bonds. Off course I also have vti. And it works like a charm.
Excellent overview, even for a neophyte like me. One addition, I would suggest looking into BNDW, which is Vanguard's world bond fund – currently ~50/50 BND / BNDX (so 50/50 US and international bonds). Up to you, and your hedging needs.
This was great. Exactly what I needed.
Buying long term bond fund, wouldn't be kind if like buying an annuity?
I learned more from this 45-minute video than an entire semester of Finance. It was concise but detailed.
Bonds, or fixed-interest generally are a fine addition to a portfolio. However you lose control of what should be a simple investment when you buy bond mutual funds or ETFs containing thousands of different bonds with varying details. These can and do pay negative returns. i.e. 2022 just after this video was made. I prefer short-term fixed interest, that you can hold to maturity or IBonds that are not traded on a secondary market, so you always can see a return of principal plus interest
Great explanation, Thanks
Rob, thank you very much for this information. Like others have said, you articulate the key concepts so well. Very useful 👍
Great video!! I think there's one small issue at 3:22, when you talk about a $10K bond with 2% interest ($20). The video says, "Whatever the interest is, you're going to get that every 6 months." I interpret that to mean you'll receive $20 every 6 months, but I think you meant $20 per year split into 2 installments. Otherwise the bond would pay $40/year or a 4% coupon. Anyway, loved the video — super informative.
Excellent video. Thank you !
Really Well Done
I have a bond thru inheritance from12/12 at 5.5 % at 20 years
I’m confused though if you get $1000 dollar bond at 2% you get you $20 every 6month after 10 years they give you back the 1000. If new bond come out hous does that effect yours if you ride the original out to it maturity. If I don’t sell it I don’t loose anything correct? I’ll still come out positive with 1400 ($20 every 6mo for 10 years + the original 1000)??
Thank you
Such a talented instructor!
Very interesting. Well done. Thanks.😮