What Is The Bond Yield Curve?
Understanding the relationship between bond risk and time to maturity and duration of a bond provides the basis for understanding the bond yield curve. The yield curve shows the yields to maturity for a series of bonds — typically U.S. Treasury bonds — with the same credit quality but different maturity dates, along with the term structure for interest rates.
What Bond Liability Means For Your Retirement Plan
Bond prices are sensitive to interest rate changes, and bond duration is a measure of just how sensitive. For instance, if a increase in interest rates from 2% to 3% caused a bond’s price to fall by 8.5%, the bond would have a duration of 8.5, meaning that a 1% rise in interest rates leads to an 8.5% drop in price.
3 Ways To Incorporate Bonds Into Your Retirement Strategy
Bonds can be incorporated directly into a retirement strategy in three broad ways:
1. An assets-only approach to build a total returns investment portfolio,
2. Matching the duration of bond funds to the duration of the retirement liability, and
3. Holding individual bonds to maturity to generate the desired cash flows to fund expenses on an ongoing basis throughout retirement.
Understanding Bond Returns
Bonds may not be as flashy as stocks, but they form the bedrock of your portfolio, so you should understand how they work.
Can You Rely On Dividends For Income?
There’s real value in knowing where your money will come from. Hence the appeal of income investing – building a portfolio focused on creating a long-term steady stream of income…But income investing presents a few problems.
Should You Keep International Stocks in Your Portfolio?
There will always be some asset class that does poorly. Over the last few years, one of those asset classes has been international stocks. They have underperformed US stocks each of the previous three years, and it’s looking like they’ll do it again this year. Given this underperformance, we’ve had some people ask why we […]
Should We Base Retirement Income Planning On Historical Data?
William Bengen’s 1994 study and the Trinity Study were only meant to serve as starting points.
The Hidden High Costs of Index Funds
Here we cover the basics of index funds. Today, many investors use index funds because they provide an easy way to gain cheap, diversified exposure to specific areas of the market. The question is this: Is an index a precise representation of the sector of the market it describes?
How Do Presidential Elections Affect The Markets?
With the presidential election coming up, people are naturally curious about what the elections mean for the stock market – and, more importantly, for their investments (and everything those investments represent).
Are Oil Prices Lower Because of the Stock Market?
Is the volatility of oil a result of the volatility of the markets? Or vice versa? Or neither?
