Bonds and Bond ETFs Explained (FOR BEGINNERS)

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Bonds and Bond ETFs Explained // Bonds can be an integral part of any investment portfolio because of its income safety and return predictability. In this video, we will illustrate about what a bond is, what to look out for and how to buy bonds. We also check out what are important information inside a real SEC bond filing prospectus. A suggested approach to bond investing, the bond ladder approach, which offers flexibility and diversification is also explained. Though bond investing can be expensive because of the commission, so bond ETFs and index funds should be a part of anyone's consideration.

Timestamps:
0:00 - Introduction
0:45 - What is a Bond
1:00 - What is Fixed Income
1:21 - Why Bonds are Safer
1:38 - Why are Bonds Issued
2:01 - A Sample Bond Prospectus
2:28 - Bond Issuer
2:40 - Bond Issue size
2:52 - Bond Maturity
3:05 - Bond Coupon
3:25 - Bond Face Value
3:38 - 3 Benefits of Bond Investing
3:53 - Bond Return Predictability
4:05 - Bonds are Less Volatile
4:30 - The Drawbacks
4:46 - Default Risk
5:04 - Interest Rate Risk
5:21 - Bond Illustration
6:28 - On Inflation Risk
7:08 - How to Make Money On Bonds
7:23 - The Bond Ladder Approach
9:04 - Credit Rating Agencies
11:11 - How To Buy Bonds
12:00 - Bonds vs Bond Funds
12:52 - Bond ETFS Government Bonds
13:56 - Bond ETFS Corporate & Government Bonds

Recommended Video:

#updive #bondinvesting #investingforbeginners #fixedincome #bonds
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☆ Disclaimer ☆ :
This content is for education and entertainment purposes only. The channel DOES NOT provide investment or tax advice. The information discussed does not consider differing investment objectives, risk tolerance levels and might not be suitable for all investors. Past performance is not indicative of future results. Investments risk, including the possible loss of principal.

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☆☆ REACH OUT ON SOCIAL ☆☆:

[AkouriAmmar]

It's called a coupon because the bonds initially contact in the form of piece of paper with detachable coupons, you detach them when a payment date arrives and give them to the bank for money.

[mr.snuggle]

Underrated channel. Great content, editing & presentation.

[SaadKhan-qdev]

By far the best video online in regards to bonds. You're a legend & it's only a matter of time until you get the recognition you deserve. Subbed!

[jesusinablackman]

Best teaching so far! And I guess the best there can be !

[Nicko]

The most comprehensible video about bonds compared to others available on youtube

[nicoqueijo]

This was very insightful! Thanks for making this video!

[colbypriest]

Super underrated. Still very easy to understand, but I feel like alot of other finance channels are afraid that if they share share too much info they risk not being easy enough for a 5 year old to understand. Thanks for all the explanation. Very helpful.

[aaronvdw]

Finally clicked why bond prices go down as interest rates increase. Thanks!

[iron-Hide]

Well explained sir. I think there's a lot of us who are realizing we can save money with self-directed investing versus going to our banks and having the robots do it. Appreciate all the feedback as I learn more about potentially investing towards bonds in my portfolio.

[Jorge.]

excellent explanation. by far the best I've found. thank you

[lxwqtkc]

Thank you so much for taking your time and making such an informative video. There is one thing I don't quite understand, what determines the price of a bond ETF? Please correct me if there's anything I've misunderstood: When you buy a bond for say 10k at 5 year maturity and 1% interest then you will get paid an interest/dividend at regular intervals throughout those 5 years and then get the 10k back if you keep the bond until maturity. You could also sell the bond before that and then the price might differ from the 10k depending on the market. In these cases the market price will depend partially on the movement of the interest rates of other bonds/the central bank etc. But what determines the price of a bond ETF? Is it supposed to reflect the current market price of the combined bond holdings in the ETF? Is it supposed to reflect the total purchase price of bonds within the ETF divided by ETF shares? Like how closely linked is the ETF price to the underlying bonds? And is the ETF price very susceptible to the differing interest in that specific bond ETF, so that the ETF price can become quite disconnected to the bond market pricing?

[jabetogar]

Gracias por la información. Lo que interpretó es cuando las tasas son altas los bonos se ven muy pequeños, cuando las tasas son bajas los bonos en comparación se ven grandes. 😊

[augustusg]

A better way to explain the effect of interest rates on bonds is that the person buying your bond in th open market isnt a fool and will price your bond in such a way that he will end up getting the higher return through a capital gain and the bond's coupon rate. This is similar to NPV with irr and wacc as well as value creation and destruction in valuing businesses by using ROIC and WACC. 😊

[cjmccoy]

Love your use of the 'seesaw' to describe the relationship between interest rate and bond prices. Will never forget now! Thank you!!

[m.t-thoughts]

I think it's important to think about the competition if they can take over the companies customers which means that it has a better pricing policy to determine if it will be able to pay out the bonds they issued or that the products they produce are actually needed and not just luxury/selling hope for an easier life as well /company bonds

[TwitchRadio]

Thanks for the video as well as your time.. 👍

[cosmicbutthairs]

Thanks for the tickers. Seriously considering making it part of the portfolio these days

[TheBeav]

Coupon was a term for the little piece of paper that you would physically tear off the Bond back in the day and take it to the bank to get your interest payment

[melisdainon]

You are great at explaining this - I hope you continue producing videos. Excellent job!

[weideng]

thanks a lot for your high quality work buddy, really appreciated! As an individual investor, if I want to time the market and understand real yield at current NPV, which one I should look at?
1. 12m Trailing Yield 2. Running yield 3. Average Yield To Maturity. I will assume #3 is preferrable.