Bond Pricing 101 – How Are Bonds Priced?
Bonds serve as the foundation of many people’s retirement plans. Because of their reasonably predictable nature they are able to both temper the risk to your investment portfolio from stocks, as well as provide a stream of reliable income when held as part of a bond ladder. However, the mechanics of how bonds are priced […]
Laddering with Individual Bonds
Duration matching is not straightforward for bond funds when shares of the bond fund must be sold to meet ongoing retirement expenses. If rates have risen, shares of the bond fund may need to be sold at a loss, with more shares sold to meet a given spending objective. This triggers sequence risk and locks […]
The Yield Curve and Break-Even Inflation
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 US Treasury bonds—with the same credit quality but different maturity dates, along with the term structure for interest […]
The TIPS You May Need – Treasure Inflation-Protected Securities (TIPS) – Part 2
This article is part of a series; click here to read part 1. In 2003, Zvi Bodie and Michael J. Clowes published the book Worry-Free Investing: A Safe Approach to Achieving Your Lifetime Financial Goals, in which they argued that typical retirement-oriented investors should rely primarily on TIPS for their retirement savings. Of course, other […]
The TIPS You May Need – Treasure Inflation-Protected Securities (TIPS) – Part 1
In discussing retirement liabilities, it is also important to address the issue of inflation and how to think about bonds when they are meant to fund a liability that grows with the consumer price index. Fortunately, this is now practical as the United States began issuing Treasury Inflation-Protected Securities (TIPS) in 1997. Backed by the […]
2020 – Q1 Quarterly Market Review
2020- Q1 Quarterly Market Review
2019 – Q4 Quarterly Market Review
2019 – Q4 Quarterly Market Review
The Coronavirus and Its Effects on the Market and Your Retirement
Just like many other areas of life, the novel Coronavirus is having a significant impact on the financial markets.
How Do Interest Rates Affect Bond Prices? Understanding Bond Duration
Most investors recognize that there is a relationship between interest rates and bond prices. At their most simple level, bonds are simply loans that the issuing organization takes from investors. And because of this, changes in interest rates have a significant impact on bond prices. However, the way that interest rates affect bond prices is […]
Understanding Bonds: A Key Ingredient in Your Retirement Portfolio
Bonds sit in a strange place in our collective consciousness. They’re the “safe” part of our investment portfolios, but they also conjure up images of Wall Street brokers with a brick sized cell phone back in the 80s. Thankfully, we don’t need to consult with Gordon Gecko about our portfolios anymore. But it is worth […]
