Investing In Corporate Bonds : High Yield Investments
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- čas přidán 15. 06. 2024
- In this video, we’ll look at corporate bonds as a way of generating a higher return and income than you would get with government bonds. We’ll look at what a corporate bond is, the reasons to buy them, the risks associated with them, how to decide which ones to buy, how to buy them in practice and finally we'll look at the macroeconomic factors which will help us decide when to buy and sell corporate bonds.
Thank you to Cbonds for sponsoring this video.
Cbonds currently provides detailed information on over 800.000 bonds from 190 countries, with one of the most complete and precise bond screeners available worldwide! For viewers of PensionCraft, Cbonds has some special discounts. If you use our link you'll get a free one-week trial and up to 50% off their private investors’ dedicated plans bit.ly/47nekIM (This link provides you with a special offer and we may also earn a commission)
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Timestamps
00:00 Introduction
00:31 What is a corporate bond
03:40 Why buy corporate bonds
10:04 Financial Health Warning
11:08 How can you buy corporate bonds?
14:48 How do I choose the right bond for me?
20:01 How do I know when to buy/sell a bond?
23:49 Conclusion
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DISCLAIMER
All information is given for educational purposes and is not financial advice. Ramin does not provide recommendations and is not responsible for investment actions taken by viewers. Figures that are quoted refer to the past and past performance is not a reliable indicator of future results.
✔ For viewers of PensionCraft Cbonds has some special discounts. If you use our link you'll get a free one-week trial and up to 50% off their private investors’ dedicated plans bit.ly/47nekIM
(This link provides you with a special offer and we will also earn a small commission)
I gave Stockopedia a trial but for me £450 is a lot to justify. Pity they don't have a cheaper option.
Saturdays are better with a pensioncraft upload!
Thanks so much - glad you enjoy it @Oasisfan432
Very educational video, as always. Thanks Ramin. A small suggestion though. Normal investors don't typically buy individual corporate bonds. So a video about bond ETFs would be much more valuable, as it is easier to buy them and they have different characteristics due to the fact that they're diversified by default and sometimes they have duration restrictions too. Keep up the good work!
Good tier level financial education!
How do you feel about buying currently 25+ year European Gov Bond ETFs? ...Before ECB rate cut(s). There are couple of these (acc) etf's availble in Europe; one by xtrackers and one by Amundi. Duration whopping 21 years, while there might be minor problem with liquidity as they are "only" 200m funds. Would be interesting to hear an opinion / see a video about this, with some info on how long rates move in Euro area... do they follow ECB cuts or do US rates affect them as much... are there other factors which effect EU long yields.
Largest countries included in these etfs are France, Gremany, Italy and , Spain.
Buying some would probably be good in recession/crash... but naturally the biggest worry is if that crash comes with resurgent inflation... then pretty much all assets are scr-d ... (apart perhaps gold). Decisions. decisions...
I have already a fair chunk of medium duration bond etfs... but they don't give much profit,, although don't lose much either.
God tier level financial education!
Hope you have a great weekend pensioncraft and pensioncrafters!
Thanks @GavinLawrence747
Fantastic overview, thanks Ramin.
I like the longer video as well 👌
Glad you liked it @shimsteriom4191
11:45 Perhaps our friends at C-Bonds should add whether a bond is ‘qualifying’ or not? Worth an ask.
Super video Raymon Regards from Minneapolis
Glad you enjoyed it @ebrahimhabib477
Yo explained that very well thanks Ramin
No problem 👍 @ebrahimhabib477
Thanks for this one Ramin, it was very useful to me. Bond ETFs are something I want to know more about as I move toward drawdown.
Glad it was helpful @DJ-nn6wn
The upside for stocks is unlimited, but unleveraged stock downside has a limit - zero.
Not when your stock losses cause the wife to divorce you and take your house and car. :)
@@trickyrat483And the dog?
Downside is max 100% upside is unlimited … fixed it for you
When looking at your stock exposure in isolation, going from 100 to 0 is technically an infinite decline, as 100 is infinitely higher than 0. Same thing on the upside - stocks can grow to infinity, which is infinitely higher than 100.
-100%*
Preferred shares next ??
Hi Ramin, have followed your excellent advice and invested in low coupon UK gilts for the tax free capital gain rather than income. Noticed HLansdown also offer ‘’strips’ with no yield at all. Are they even better? Any chance of a video explaining what they are and how they are taxed. Thanks!
What if a company misses intentionally a payment, in order not to pay investors and thus profit from their loss?
Can this happen or are there safeguards in order to prevent this?
Cause in my mind, without having extensive knowledge the company would miss a payment inthentionally and then default (however they would keep the money from the investors the borrowed and thus profit from it) then the only repercussion would be that the company's credit rating would go down.
Can this happen?
What a man this guy is !!
I think it’s much better to buy the corporate bond fund rather of buying individual ones
Excellent introduction about C Bonds!! Wouldn’t the term SOFR be a better choice in terms of a risk free rate? Cheers and many thanks
Im wondering why apple would issue a bond with so much cash on hand
I am going to guess there are tax benefits and cash returned to the US is taxed.
What tax benefits?
@@jimbojimbo6873 Just my best guess.
Good question @jimbojimbo6873
Back in 2016 Apple had big cash reserves of $67bn, and it's slightly higher now. I know that tax rules have changed over the years and I think that maybe this recently affected some of the advantages of share buy backs in the US but the bottom line is 'I don't know' why they would look to issue a $4bn bond back in 2016.
If I remember correctly they had a lot of cash outside the US and would have to pay US taxes to repatriate, so issuing bonds for dividends and buybacks was more economical than repatriate the cash and using it for dividends and buybacks.
I can appreciate single company risk, but how risky really is a high yield corporate bond ETF with over 1800 holdings? What is a rational way to assess the risk? For example, USHY in the US market. This lost less than the SP500 in recent downturns, but I do remember what bundles of low-rated mortgages did in the GFC.
I'm not sure if this would be a viable strategy to core and satellite bonds, core being a Gilt and Satellites made up of Corporates. I'm then thinking these portfolios could be used to manage sequencing risk and coupons up till maturity could be recycled into ISAs etc assuming it's being held in a trading account
Exchange rates should be also taken into account, I think Microsoft, Apple, Johnson are generally less risky, but USD might become soft.
To complex for me I am out 😢
Enjoyed the video apart from the continual plugs for C Bonds. Understandable I suppose, but this video seems more skewed to the sponsors promotion than others you've produced.