How To Buy Corporate Bonds On Fidelity | Bond Investing For Beginners
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- čas přidán 20. 04. 2024
- 7.5% investment-grade corporate bonds from Prospect Capital Corporation & how you can buy them (step-by-step) on Fidelity - that's what we'll be talking about in today's video!
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Here is the overview for Bond Beginners:
1. Bond Basics
What A Bond Is & How A Bond Works
Why Invest In Bonds
New Issue vs Secondary Market Bonds
Interest Rates & Bond Prices
Current Yield & Yield To Maturity
Always Remember This!
Buying At Par, Above Par & Below Par
Different Types Of Bonds
Wrap-Up
2. The Risks Of Bond Investing
Seven Key Bond Risks
Credit Risk
Interest Rate Risk
Reinvestment Risk/Call Risk
Inflation Risk
Liquidity Risk
Currency Risk & Country Risk
Bond Risk Mitigation Strategies
Wrap-Up
3. US Treasuries Overview
What Are US Treasuries
Why Invest In Treasuries
Where Can You Buy Treasuries
How Are Treasuries Taxed
Wrap-Up
4. Treasury Bills
What Are Treasury Bills (T-Bills)
When Do T-Bill Auctions Happen
Where Should You Buy At Auction
Auto-Roll When Buying At Auction
Where To Find Recent Auction Results
High Rate vs Investment Rate
Reopening Auctions
Cash Management Bills (CMBs)
Buying & Selling On Secondary Market
Wrap-Up
5. Treasury Notes & Bonds
What Are Treasury Notes & Bonds
When Do Auctions Happen
Buying Treasury Notes & Bonds
Auction High Yield vs Interest Rate
Floating Rate Notes (FRNs)
Treasury Zeros (STRIPS)
Wrap-Up
6. TIPS (Inflation-Protected)
What Are TIPS
When Do TIPS Auctions Happen
Nominal vs Real Yields
Negative Yields
How Do You Adjust TIPS For Inflation
Taxes On Phantom Income
Secondary Market Liquidity
Wrap-Up
7. I-Bonds (Inflation-Protected)
What Are I-Bonds
How Does I-Bond Interest Work
I-Bonds vs TIPS
The Annual I-Bond Limit
Wrap-Up
8. Agency Bonds
The Universe Of Bonds
What Are Agency Bonds
How Are Agency Bonds Taxed
Treasuries vs Agencies
Who Might Want To Consider Agencies
Yield-To-Call & Yield-To-Worst
Where Can You Buy Agency Bonds
Wrap-Up
9. Municipal Bonds
Our Bond Universe Gets More Complex
What Are Municipal Bonds
How Safe Are Munis
How Are Munis Taxed
The De Minimis Rule
Social Security & Medicare Premiums
Treasuries, Agencies & Munis
Who Might Want To Consider Munis
Wrap-Up
10. Corporate Bonds
Our Bond Universe Is Complete
What Are Corporate Bonds
How Safe Are Corporates
Corporate Bond Hierarchies
Five Key Features Of Corporate Bonds
How Are Corporates Taxed
Treasuries vs Corporates, Etc.
Who Might Want To Buy Corporates
Wrap-Up
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Here is the overview for Bond Masters:
1. Stocks vs Bonds
Historical Performance
Are Bonds Really Less Volatile
Why Invest In Bonds
Accumulation vs Decumulation
Allocation of Stocks vs Bonds
Wrap-Up
2. Which Bonds Might Be Right For You
Treasuries & Other Types of Bonds
Nominal vs Real Yields
Inflation vs Non-Inflation-Protected
Taxable vs Tax-Advantaged Accounts
Wrap-Up
3. Bond Ladders & Other Bond Strategies
Normal vs Inverted Yield Curve
What Is A Bond Ladder
5 Important Bond Laddering Questions
Laddering When Rates Are Rising
Laddering When Rates Are Falling
Laddering When Rates Are Uncertain
What Is A Bullet
What Is A Barbell
Wrap-Up
4. Holding to Maturity vs Selling Early
Why Hold to Maturity
When To Sell Early Before Maturity
Tax Implications Of Selling Early
Wrap-Up
5. Individual Bonds, Bond Funds, Etc.
Why Buy Individual Bonds
Why Buy Bond Funds
Bond Fund Considerations
Key Bond Fund Concepts
CDs vs Treasuries
Other High-Yield Investments
Wrap-Up
6. Our B.E.S.T. Model Portfolios By Age
Our B.E.S.T Model Portfolios By Age
Model Portfolios In The Industry
B.E.S.T Model Portfolio Difference
How Much Do You Need To Retire?
How I Use The Rules of 100, 110, & 120
B.E.S.T Model Portfolios (20s)
B.E.S.T Model Portfolios (30s & 40s)
B.E.S.T Model Portfolios (50s & 60s)
B.E.S.T Model Portfolios (70s+)
Wrap-Up
7. The Decumulation Phase
What Is The Decumulation Phase?
Bear Markets & Recessions
What Can You Do In Bad/Bear Markets
Decumulation Tax Considerations
The 4% Rule
The Bucket Strategy
The Flooring Approach
Jen’s Bucket Strategy With A Twist
Wrap-Up
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SOURCE: www.fidelity.com/
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Thank you for speaking slowly and enunciating so clearly in all of your videos. These are not processes that should be rushed through. I appreciate your well articulated step-by-step instructions on this and other processes you have discussed in the past.
I say this every time I post on your videos - I have made a lot of money by *paying attention* to the things you discuss in your videos - and by following these step-by-step instructions when acting on my investment decisions. Thank you as always, Jennifer!
You are among my favorite CZcamsrs. Thank you for all you do.
Your tutorials are great the way you explain in simple and to the point details. Thanks for your great service.
Thank you again you are a great instructor.
Locking up money for 10 years in a single BBB- issuer's bond sounds WAY too risky, even with a 7.5% coupon. You can get a higher rate of return for WAY less risk simply by investing in an S&P 500 tracking index fund. Bonds are supposed to be LESS risky than stock funds, not more. If you must buy individual corporates, stick to A and higher. Even better, just buy US treasuries or FDIC-insured brokered CDs.
Sounds accurate, not to mention less complicated for the novice investor.
There is nothing wrong with tying some money up into bonds like this, with pretty much guarenteed returns. Yes, generally the s&p would do better, but you have decades, such as the 1970's and 2000's, where the s&p is flat, or slightly negative. With the run it has had the past decade +, I could see another decade of flat to slightly up performance.
It might not tight up the $ for 10 years, if rate drops, company might decide to call the high yield bond in to refinance, if Fed drop rate a few times, you can sell it in open market with profit. The risk is when the company gets lower rating or default or the bond is called and you end up holding cash in low rate environment.
There is a small place for this in a larger portfolio, but your point is well taken
I think with the risk/reward with BBB- bond, I would rather own SPY. Bond in my portfolio is supposed to be safe to balance out the risk in stocks.
Thanks for the video! I Jumped in and purchased a small amount of Corporates. Nothing ventured, nothing gained my mother would always say. 😊
Appreciate your videos. One request : Can you walk through what may happen if these corporate bonds default. When, how and will we get our money back? Uncertainty regarding this is what prevents a lot of retail investors in investing directly in investment grade corporates. It seems going with bond mutual fund or etf is always a better option than buying individual corporate bonds.
this is super interesting to know too.
Some HERO’s are undercover 😊. I’ve shared this with my brother and friends. Timely tutorial
so informative, great alpha
Thank you, Jenn. As always, a detailed explanation with great visual slides. Is there a video of the index funds you recommend or invest in for buying and leaving long-term for younger folks?
Not at this point, but we’ll add it on the list!
Great video as always. I have been going with Agency bonds. 6.5% in 20 year, 6.15% on 5 and 10 year. All callable but YTW is same as YTM as purchased at Par. AAA rated.
Thanks for sharing! We haven’t found any new issues with good rates that are non-callable currently (for obvious reasons given the market environment right now).
All of my 6%+ agency bonds got called last December. Lessons learned the hard way I guess.
Oh I want it called eventually. I went with ones at least 6 to 12 months from first call date. They are all below par now so guessing next year.
Interesting video, can you do a Video on How to Read a Prospectus and what items to watch for.
Good question. Even though she highly recommends reading them, who really reads and understands the myriad + pages?
@@poolmilethirty2859 Does so true
Very interesting. Interesting company (in what they do) and seems like a good investment (other than the continuously callable component). Right off the bat I wonder how prone this company is calling in their bonds and whatnot. Wondering if that's the "duration" or something else (probably), I could always search. Very thorough description too.
PSEC 1Y stock is -21% (1.6M avg vol, 2.25B mkt cap). Does this factor into a decision to buy their bond or not?
@@youeweu I answered to this earlier but for whatever reason it deletes, I think it was youtube. PSEC hasn't deviated from the single digit price range for a little while (you can see this from the max range on any price chart) but it has gone down steadily from $8.88 or so until now. I'd pay more attention to financials (which I know nothing about), whether they have defaulted on their debt (which I can't remember if this was covered in video, but I know nothing about)...in fact it may be because they have a some what unfavorable rating connected to them that is the reason for the higher risk debt offering, I am not an expert. Remember you aren't buying the stock (but you can use this as a factor) but supplying a company money they will pay you back later and with interest attached. The callable feature gives me pause the most, may not get the full 7.5% before they call it back.
So here's a question...based on info at 11:52 - Why would I be able to BUY a corporate bond like the one in question at my broker but then NOT have it listed on an exchange for potential sale later? Seems like a risky thing to have nothing but a "entrance" at inception but no exit if you'd like to sell in the future.
I think understood everything except “…and will not be listed on any exchange, which may negatively impact its liquidity…” Why not? What does that mean? Can it be traded on the secondary market?
could you show great munipal bonds to purchase on fidelity??
this would be great, and also the best place to keep them/buy them in.
With limited liquidity, this is probably more suitable for people who are actually prepared to tie up the funds for 10 years.
I just sold two of mine 2026 bond from the same company in Fidelity within one day, pricing has to be competitive.
So Fidelity has various money management services. Do they have one that would manage a 100% bond protfolio? And by managed I mean, they make all the decisions as to what is bought and sold, and I would only choose the guiding strategy.
Wow, there's a lot to that.
If I decide to sell the bond prior to maturity, will it sell as easily as an equity?
PSEC is a solid company. Thanks for bringing this offer to our attention.
@@variousstuff6469 because they are loaning that out for more, duh!
Will you do the same for Schwab?
It’s on the list!
Quick question: I bought I bond in September 2022. Would I still get the same rate of return for the next 6 months as of a new I bond buyer ? thank you for your help always .
Nope
That part at 11:50: "And will not be listed on any exchange" that was kind of a record scratch moment. How can we tell if a bond will or will not be listed on exchanges?
My question exactly...Sounds like all the benefits and optionality accrue to the issuer and not the investor
Jennifer - need baby steps to buy bonds in Vanguard.
It’s on the list!
@@DiamondNestEgg OK I'm waiting...
I wish in real life when I accomplished something confetti would fall.
I’ll hope it works out for you
Could you explain how to do this on Schwab?
Stay tuned!
Are corporate bonds guaranteed by a regulating body like fdic/sipc?
No.
@@pdouglas3866 thanks for reply
any bond ETF can offer similar yield?
ETF's no maturity so price fluctuates a lot more
IBHH is a corp bond fund with a 2028 maturity and will liquidate then .
why would someone do that?
what percent of all bbb- bonds fail....??.Historically, investment-grade bonds witness a low default rate compared to non-investment grade bonds. For example, S&P Global reported that the highest one-year default rate for AAA, AA, A, and BBB-rated bonds (investment-grade bonds) were 0%, 0.38%, 0.39%, and 1.02%, respectively. what happens when a bond fails??
Jen has a great table in one of her videos on bonds that has all the info you might want.. rate of defaul on credit ratingt vs time of the life of bond... I cant remember the video title ( maybe about a year or so ago) but maybe someone can link it if they know which video it is.
Maybe a dumb question, why not just buy stock in the company and get a 13% dividend?
Wow.. they really pay 13% dividends!Anyway, Food for thought:..., Bond holders are more likely to recover more of of their investment money in the hierarchy of bankruptcy proceedings as compared to the stock holders.
Its all about the risk I guess.
Stock price fluctuate. Usually, when the dividend % is very high, it means the company isn't doing good. For a single company dividend that gives 13%, the only type I can think of are REITs which have been tanking for the past 2 years.
If you're interested in dividends, check out SCHD. It gives a 3.5% dividend rate and has very solid companies in its holdings
BONDS? What happened to treasury's for us much older folks?
If you live in n.y., state tax free and they are as liquid as t bills ,show me, @@salvaje20
Agency bonds (10-20 yrs) are a bit higher than T-bills but not as high as the corporate bond she was talking about in the video..And they have a better credit rating than that corporate bond but they are still callable..
7.5% for 10 years tenure????? Is that what I heard?
I promise you it will be called
Just my opinion,,: It will probably be called, but on the good side you will get a pretty good interest rate till then....better rate than a 26 week TBill . And another consideration is, since it is barely investment grade (thus the high rate of 7.5%) if it is called, then there is less risk long term.
Just remember that callable bonds Benefit the issuer, Not the investor... if rates drop, the issuer can call and reissue new bonds at a lower rate and you'llhave to find another place to put your money. But if they go up, they will keep your money on the hook so you can't get the higher rate elsewhere. It's a win_win for them.
But 7.5% is a good rate if you can tolerate the risks...credit rating, long and short term, etc.
@sonjasssggg4575 I see you’ve been watching our callable bond videos :-) Jennifer