Should You Invest In Bonds? | Is Bond A Good Investment?

Published on March 5, 2021

Trending updated videos relevant with Gold Investment, Money Investing, Laddered Bond Portfolio, Bail Bonds Maryland, and Should I Buy Individual Bonds, Should You Invest In Bonds? | Is Bond A Good Investment?.

In this video, we will look into bonds. What are bonds? What are the benefits of investing in bonds? And whether you should be investing in bonds or not. Enjoy!

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0:00 – Introduction

0:38 – What Is A Bond?
Whenever you borrow money from the bank, you are the borrower, and the bank is the lender, that money which the bank lent to you is known as a bank loan. But when the bank is the borrower, and you are the lender, that money which you lent to the bank, is now called a bond.

In return for lending them money, the borrower will give the lender a fixed amount of interest every year. When the bond matures, the money will be returned back to the lender.

2:05 – Benefits Of Investing In A Bond
1. Fixed Income
By investing in bonds, you will know exactly how much you will be getting, and when you will be paid. Company dividends can go up and down, but bond interest rates do not fluctuate.

2. Lower Risk
Whatever money you invested in bonds, that money will be returned back in full to you when the bond matures. However, even though bonds guarantee that you’ll get back your money when it matures, here’s a small foot note, you will only get back your money if the company hasn’t gone bankrupt. This has happened before to Hyflux investors.
https://www.straitstimes.com/singapore/hyfluxs-fall-from-darling-of-the-entrepreneurial-scene-to-troubled-firm-5-must-reads

However, there’s a very easy to avoid the risk of company going bankrupt, and that’s by looking at the bond rating.

3. Clear Ratings
Bonds are rated by international credit rating agencies. It will say whether it’s a good bond, or bad bond. Even though some bonds doesn’t have a rating, there’s a super easy way to check whether it is a good bond or not, that’s by looking at their interest rate, ie the lower the returns, the lower the risk; the higher the returns, the higher the risk.
https://www.investopedia.com/terms/b/ba3-bb.asp

5:17 – Should You Invest In A Bond?
In any investment, you always have to choose between two things, do you want stability or do you want growth? If you are the kind that prefers stability, and do not want to risk losing money. then you can go for bonds. A general guideline is that the older you are, the more bonds you should have in your portfolio, because your risk should be adjusted according to your age. https://www.financialsamurai.com/the-proper-asset-allocation-of-stocks-and-bonds-by-age/

6:21 – My Thoughts
As of right now, I would not invest in bonds. A huge reason is because I’m living in Singapore, and in Singapore we have the CPF. At 65 years old when we retire, we will be paid a monthly income, which should be more than enough for us to live on based on a study by Singapore researchers.
https://www.mom.gov.sg/employment-practices/central-provident-fund/how-you-can-use-your-cpf
https://bit.ly/34JLBQ3

With CPF acting as a bond by giving me a stable income, and with my investments giving me additional income, I don’t see a point to invest in bonds during retirement. But not everyone is in my situation, and not everyone can handle volatility during retirement, in that case, bond is a good consideration during retirement.

What about investing in bonds during retirement? With the market being so volatile, isn’t it better to invest in bonds?

A study by Vanguard looks at the effects of having different % of bonds vs stocks in the portfolio. If you have 100% bonds, your portfolio will be stable but it will have a lower return. But if you have 100% stocks, your portfolio will fluctuate wildly, but it will have a much higher returns.
https://personal.vanguard.com/us/insights/saving-investing/model-portfolio-allocations

So you do not need to invest in bonds just for the sake of stability. Because if you do so, you will be sacrificing a lot of returns for stability, which you might not even need in the first place.

Should I Buy Individual Bonds

Should I Buy Individual Bonds, Should You Invest In Bonds? | Is Bond A Good Investment?.

3 Of The Top 10 Mutual Funds To Purchase From 2011

At the other severe you have junk bonds, where the provider has a bad credit ranking and default is a genuine possibility. I would not advise you to try buying bonds without any assistance.

Should You Invest In Bonds? | Is Bond A Good Investment?, Enjoy latest high definition online streaming videos about Should I Buy Individual Bonds.

How To Invest Cash To Win

You need to consult an expert tax individual for complete information worrying your state. When shared funds gain they pass the profits on to the financiers. How will high rates impact the payment of loans already made?

The Eurozone financial obligation issues have lastly taken their rightful location as an everyday front -page news story. Tuesday, Spain brought 2.5 billion Euros to market in 12-month bonds. The average rate for the auction was 3.45%. This is 45% greater than previous month’s auction rate. For the sake of comparison, it’s difficult to discover a 12-month CD over 1% here. Wednesday, 20,000 Grecians rioted in response to the current round of austerity cuts. Lastly, European Reserve Bank President Jean -Claude Trichet is requiring a broadened role of the bailout fund. These headings all echo the very same theme. unpredictability.

If you leave the company is the company match, the only quantity of money a company might keep. Some companies have a required quantity of time you need to be employed at the company prior to you receive the amount they matched in your account. This is called the vesting schedule. Companies might require you work at the company for three years before you get the cash the company contributed to your 401k plan.

To evaluate, there was an enormous shift from stocks to bonds since of the monetary meltdown and bear market of 2008- 2009. Ratings of financiers moved from “dangerous” stocks to “safe” bonds. Now when I state “bonds” here, I am discussing everything from Individual Bonds, to mutual fund and bond ETFs.

Corporations go broke, and federal government entities enter into financial trouble. Plus, when rate of interest go up significantly, virtually all existing Individual Bonds become less attractive and decline.

This is a national muni bond exchange traded fund (ETF), so it is only tax-free for federal income taxes. The expenditure ratio is a low.25% and the fund holds over 375 various bond positions. 83% of the fund is invested in Individual Bonds ranked AA or greater. The typical duration of the fund is 7.5 years.

Short term investments can consist of cash market financial investments, certificates of deposit (CD’s), and others. After a short amount of time, you can make interest on these financial investments. You can typically begin getting interest in as low as one year or less. These short-term financial investments are much less risky than bonds and stocks, but there is lower capacity for growth. This suggests you can not anticipate as large of a return on a short-term financial investment as you could from stocks or bonds.

The bottom line is that we have actually seen bonds suffer problems before, however very seldom has turbulence in the bond markets lead to significant decreases in diversified portfolios. However, having bonds in your property mix has actually constantly decreased volatility during bumpy rides in the equity markets. This compromise of just too appealing to skip.

However a license holder would be an authentic individual. I have been buying into a varied portfolio of closed end high yield mutual fund. Bondsman also allows individuals to maintain their anonymity.

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