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Questions tagged [bonds]

Use this tag for questions that relate to debt instruments known as bonds. Generally, money is lent to governments or corporations that is paid back with interest.

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1answer
80 views

Income investing in rising rates environment

I have invested in bonds and REITS ETFs for income. But these investments probably will not do well if interest rates go up. Are there any investments that will do just fine or even benefit when rates ...
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1answer
73 views

Are all AAA ratings (from various credit rating agencies) equivalent?

I am peeking into holdings of various ultra-short term debt mutual funds (average maturity of bonds should be less than 1 year) and am coming up with AAA ratings of at least three different agencies: ...
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2answers
246 views

Which spot Treasury bond is used to calculate this high-yield spread?

The link below shows the BofA Merrill Lynch US High Yield Option-Adjusted Spread. I am trying to have a better understanding of high-yield bonds before I invest in them. https://fred.stlouisfed.org/...
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4answers
445 views

Does it make sense to compare the “returns” from debt payoff with long-term stock market investment returns?

I've been thinking long and hard about whether to pay off my student loans with the smaller interest rates as quickly as possible or just pay the minimums and start investing. After reading bunch of ...
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1answer
524 views

Does par value include interest?

Is it only the principal amount, original cost of the bond at the end of maturity date or does it include the whole sum with the interest payments?
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1answer
88 views

Diversification for large bond investments

I do all my investments with four index funds, and I currently have a fairly aggressive approach with 20% in a bond ETF (AGG) and 80% in three equity ETFs. As I get older, I'll put more money in ...
2
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1answer
126 views

money owed on transferred savings bonds

In May 1995 my grandfather purchased $11k in EE savings bonds. He died on July 20, 2008. My father transferred the bonds to himself and then from him to me in February 2015 (well, the papers were ...
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2answers
3k views

Are interest income from U.S bonds subjected to withholding tax like U.S dividends to foreigners?

Foreigners are subjected to 30% withholding tax on U.S stocks' dividends. Does the same withholding tax apply to U.S bonds? Any difference between the treatment for Treasury bonds and corporate bonds?
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1answer
672 views

Find the coupon date of a bond

Is there a way to tell when a bond will pay its coupon? I know there are bonds that pay annually and others pay twice a year, but can I know this (these) dates before actually buying the bond? This ...
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1answer
47 views

Which field should I use for getting the income yield of this bond ETF?

I am looking at "iShares Global Corp Bond UCITS ETF" listed on the London Stock Exchange. On the website for this bond ETF, there are fields like; "distribution yield" "flat yield" "Weighted Avg ...
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1answer
1k views

What does DIST refer to in this equity ETF?

I am looking at this bond ETF "iShares MSCI Japan UCITS ETF USD (Dist)" which is listed on the London stock exchange. What does DIST refer to in this equity ETF? I cannot find the answer from the ...
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4answers
741 views

Should I use put extra money toward paying off my student loans or investing in an index fund?

The following is what I've written so far to examine and try to solve this dilemma I'm in of whether to put my extra money toward my student loan debt or invest it, which I'll be publishing on my site ...
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1answer
659 views

What are the ways compounding can occur from an investment in stocks and bonds?

I've been trying to understand the multiple ways stocks and bonds compound (under the definition of compounding as generating earnings from the reinvestment of previous earnings, my understanding of ...
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1answer
74 views

How does conversion of Secured Convertible Notes work?

Let's say a Company A has a public offering of $50 million in 7.0% Secured Convertible Notes that matures in 2021 to prospective investors with a conversion price of $2.00. For this example, let's say ...
2
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2answers
148 views

Zero Coupon Tax Free Bonds

I live in the United States. I believe that if an investor owns zero coupon tax free municipal bonds,the interest from their bonds must be reported on their tax return using the accrual method. Note ...
2
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1answer
4k views

How can I track TreasuryDirect savings bonds with Mint?

I have a pair of Series I Savings Bonds with TreasuryDirect. Is it possible to track their value using Mint? If so, what's the simplest way to do it?
3
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1answer
905 views

Tax obligations on POD savings bonds

I inherited series EE savings bonds, my name is in the POD (payable on death). What taxes am I obligated to pay? I know normally on bond you are taxed on the interest gained. But do I have to pay ...
2
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1answer
151 views

Bond ETFs as a means to achieve risk parity

Background One of the investors that I really look up to is Ray Dalio. He has stated that a 50/50 stock to bonds allocation does not acheive risk parity because 80% of your risk is still in your ...
4
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2answers
235 views

Why would you sell your bonds?

I've been reading about bonds lately just for the sake of educating myself about investing opportunities for the years to come. Something I don't understand is that nearly every article goes to pains ...
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1answer
128 views

What investment is best? [closed]

I recently started a savings account that gets me .015% and a CD of .025%. I want to increase my investments as fast as I can. I don't want to go into stocks; I would prefer bonds and notes. What ...
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2answers
190 views

When to buy and sell bonds

I am trying to understand the concept of when to buy and sell bonds of countries. I am looking at Greek bonds. In the Financial Times newspaper there was a story saying "Athens' two year bond yield ...
5
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2answers
3k views

What's the difference between a bond priced at $100 and the same bond having a $1000 par value?

I understand that a bond priced at $100 (par) has a face value of $1000 (or a quantity of 1m). But I'm confused as to when these should be used in conversation. The nomenclature makes me assume there ...
3
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1answer
177 views

Does taxation of Treasury Inflation Protected Securities (TIPS) undermine their function as protection against inflation?

From this document from Vanguard: TIPS are taxed in a slightly different manner than conventional Treasury bonds. The periodic inflation-based “gross-up” in the principal of TIPS is taxed at ...
3
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1answer
462 views

Pros and cons of bond ETF versus traditional bond mutual fund?

Bond ETFs are easily available on stock exchanges today. Bond mutual funds have been around for a long time. I am not sure which to buy to build an income stream as a fixed-income investor. What are ...
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7answers
10k views

Are bonds really a recession proof investment?

I believe that another crisis is imminent if Trump goes ahead with deregulation of financial firms. Whether that is true or not is not my actual question. In that context, I want to protect my 401K ...
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0answers
65 views

Are Credit Default Swaps an adequate hedge for leveraged bond portfolio?

A hedge is supposed to be a cheaper bet that pays off if a primary bet isn't profitable. With a leveraged bond portfolio, my understanding is that a credit default swap (CDS) can help hedge, but I'm ...
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3answers
217 views

Should I invest my money in an ISA or Government bonds? (Or any other suggestion)

I am a UK citizen who works in the IT industry, I have recently turned 21 and I live at home with my parents and have no real commitments or bills. I have saved up quite a sizable amount of money in ...
4
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1answer
12k views

Why bonds with lower coupon rates have higher interest rate risk?

According to the following article: Bonds offering lower coupon rates generally will have higher interest rate risk than similar bonds that offer higher coupon rates. And: For example, ...
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3answers
335 views

Any reason to hold large amounts of cash over bonds?

This question assumes one has an appropriately sized emergency fund already established. If I expect the equities market to decline in the next year or two - what specific circumstances would make ...
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3answers
2k views

Should I exclude bonds from our retirement investment portfolio if our time horizon is still long enough?

My wife and I (ages 35 and 38) have 25-30 years until we reach retirement age, and I'm doing some research regarding our asset allocation. In addition to various podcasts, articles, and online posts, ...
4
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1answer
155 views

Are Italian bank bonds as good a deal for retail investors as it seems?

The Monte Paschi announced bailout claims that retail investors will be protected from losses imposed by the bailin by compensating them for up to €100k (the financial services compensation scheme ...
21
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3answers
9k views

Bought agency bond (FANNIE MAE 0% 04/08/2027), now what?

I just bought 15 of these for $10,677 through my brokerage firm. It says 3.3% interest. I have no idea how this works. But I trust it is gov bond and will pay 3.3%. Can anyone explain how it works? ...
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1answer
530 views

Why are premium bonds more likely to be called than discount bonds?

For premium bonds in the US (ie, bonds trading at a price over par) with a call option, why are they more likely to be called than a bond trading at a discount?
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1answer
156 views

Possibility of default of Corporates A, AA, AAA bonds

Have one heard these A, AA, or AAA bond can default. If there is a possibility, what should I do? buy US treasure only?
4
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1answer
178 views

What bonds do I keep and which do I cash, why is the interest so different

I have some US treasury EE savings bonds worth 25 face value, purchased more than 10 years ago, none of them fully matured at this time. Some of the bonds are earning 4% APR, others 1.3%. Should I ...
2
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3answers
889 views

When the market crashes, should I sell bonds and buy equities for the inevitable recovery? [closed]

I'm told that for my age, I should have about 1/3 of my portfolio in bonds and 2/3 in equities. Suppose I implement that with this portfolio: 100k of SPY 100k of IWM 100k of TLT Now suppose that ...
4
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1answer
762 views

Is the principal of a savings bond taxable, or only the interest?

Let's say I cash out some government savings bonds with a face value of $2,000. Since they are 10% bonds the total amount I get when I cash them out is $2,200. Do I owe taxes on the full $2,200 (...
3
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1answer
3k views

I have 50k and want to build up a passive income [closed]

Right now I have 50k/no debt and I am trying to build up a passive income. I need something that will generate me around 5k a year. I'm a little scared and don't know much about investments. I'm ...
2
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0answers
134 views

Question Regarding Bond-Coupon Prices with Partial Period Maturity Date

Question: What would you pay for the following bonds assuming an annual yield rate of 7% based on semi-annual compounding (assume face value = $100)? A bond with a coupon rate of 6% maturing in 3 ...
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3answers
1k views

Do governments support their own bonds when their value goes down?

I'm far from expert in finance, so please bear with me. It's my understanding that a company who issued stock typically support it when the stock price go down. Does the same thing happen with ...
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3answers
150 views

collateralized mortgage obligations

I was reading a comparative description in between CDO's and CMO's on Investopedia.com and I cant seem to understand the following statement: When the mortgages underlying a CMO are of poor credit ...
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2answers
3k views

What does S mean in a bond name?

Recently i read many bonds names such as Elevated Railroad First 5s, United Drug Company 7s, etc. What does 5s or 7s mean?
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3answers
204 views

How does a bond fund fall in value?

Obviously the bonds will loose value if the issuer defaults, but if there is a stable, predictable number of defaults in the funds bond holdings, how does a bond fund fall in value? I know that the ...
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1answer
92 views

Cash or Bonds (UK)

I'm currently making my way through Benjamin Graham's book. He mentions that ± %25 of assets should be held in either cash or bonds. Could someone clarify the government bonds situation in the UK? Is ...
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0answers
375 views

Early tender offer is less than the current value of the bond. What is the benefit?

I received an early tender notice for a bond I hold: Terms: $815.00 per $1000 P.A. plus int. In addition, holders who tender their notes prior or on 08/25/16 (The Early Tender Date) are ...
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2answers
241 views

Are savings accounts just as safe as government bonds in terms of counterparty risk?

It seems that holding plain cash (say after selling stocks and waiting for other opportunities to come up) in a brokerage or bank account is a bad idea (due to counterparty risk) (Clenow, 2015). ...
5
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2answers
999 views

How to read bond yield quotes? What do the time, coupon, price, yield, and time mean?

I am newbie in finance and I recently saw Bloomberg bond yields quoted as follows: Can anyone specify what "1 month" and "1 year" mean? What do coupon, price, yield and time (EDT) mean?
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5answers
293 views

CIBC bonds with negative return [duplicate]

There is a story on CBC that investors are lining up to buy bonds with negative return from Canadian Imperial Bank of Commerce (CIBC). I don't understand why they are doing so. Can someone explain ...
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2answers
210 views

Why aren't bond mutual funds seeing huge selloffs now? [closed]

Bonds 101 is that when interest rates go up, bond prices go down. Interest rates are generally expected to be rising over the foreseeable future (although it might take a while), which means that ...
1
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1answer
67 views

What can I do to remedy ISA cash/shares transfer latency?

I discovered recently that in the UK, money deposited in a cash ISA could be transferred to a stock ISA and vice versa. Of course the sum invested in cash + stock is constant (there is a yearly ...