New to investing in bonds, I see there is a Treasury website to buy bonds directly from. Is that how you do too? Or are there any ways to buy via a broker (such as Fidelity?) if there are any better incentives? TC 250k Yoe 8years #investment #recession #stock #personalfinance
There are different types of bonds Best option I believe is to buy bond funds from a Mutual Fund Company or a shop like Fidelity
Bonds can be very VERY complicated. Recommend to go vanilla. Look at what robo advisors do (betterment, wealth front), and replicate or do it through them
You can buy treasuries online at TreasuryDirect but I only use that for I-Bonds (inflation linked and capped $10K/person) bc they’re only sold there. Online brokers (def Fidelity) should offer trading for treasury, municipal, corporate and even sovereign issues.
On reading online I see there are Corporate, Municipal, Treasury bonds. If buying from a broker, what exact bond funds have you invested in? I mean, just as there are symbols/tickets for stocks, what ‘ticker’ to search for while looking into bonds?
Check what betterment and wealth front are doing with their standard portfolio
The standard is an investment grade mix example ETFs being AGG or BND that consist of US govt bonds (generally considered safest), agency bonds (govt backed mortgages), and high quality corporate bonds. If you’re investing not in a retirement account (ie a taxable account) and earn a lot of income then municipals (ex: MUB) are useful since they are generally federal tax free income
Pardon my rookie understanding here: in what market do you expect the bonds to perform well? I am looking at AGG etf and it has been falling consistently since last 6months (similar to stocks). If investors flee to bonds as a ‘safe haven’ then more demand will drive the yeild down. So what’s benefit of bonds (especially in times of recession)?
Start thinking about bonds if you just buy at inception and hold until redemption You get a guaranteed fixed coupon for a predetermined time horizon. If you do that, you are not exposed to market variations at all. Now since the coupon is fixed, the price will adjust based on prevailing variable rates. If you buy at fixed rate of 4%, but then the market rate drops to 2%, your bond is worth more. It’s just a matter of discounting the future coupons at prevailing market rate. In general the fact that it gives you recurring guaranted coupon gives you much more stability than stocks and that’s what they’re used for. You have a % of bonds in your ptfolio for stability rather than to bet on the variations
Did you factor in the coupon payments
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Are you talking about iBonds? The famous one where you get 8% coupon is through treasurygov Otherwise you have to use ETFs. I do it through a robo advisor that invests in ETFs You can’t buy bonds directly as an individual. Not a regulated market like stocks.
You can certainly buy bonds as individual through most brokerages but easier to use bond ETFs unless you want specific issuers/maturities
Have you done that? Can you buy a specific bond issued in the past by a specific company?