Very clearly presented as always - I had some understanding of this but was never sure if had the correct understaning, the video made it very clear and the graphics crystalised the concept forever in my head - Thank you!
Thank you Ramin. I’ve long wondered “why bond funds” - this video along with your recent chat on the Making Money Podcast has finally got the penny to drop for me.
I had 50% in bonds, mainly is US Treasury 40% 1-6 months, 10% in 12 months in retirement. Currently will fill out the ladder to 2 years with CDs as currently brokered CD rate is higher for >6 months when the bond matures.
I had 40% in bonds until last year. I sold and had cash. Recently I purchased 10% of my investment into CD ladder from 3 month to 2 yr. Interest is about 4.5%. I am planning to add as Interest goes up.
Great explanation, thanks. I am currently getting 3.5% in Vanguard settlement fund/Federal money market, after fees, some in a tax deferred, another in a taxable. Variable rate, but very liquid, monthly payments.
"many of the people in the PensionCraft community locked in that high rate" ...Stretching the truth there...Way more of us also locked in to a lower rate way before that because of the advice in there 😂
@@greennewworld2718 That's right. You have to pay if you want 'financial advice'. Seriously, though, Ramin is not one of these YTers trying to tell you what you should be doing; he is more about educating us, enabling us to make our own personal risk assessments by asking the right questions, looking at sensible indicators and talking about the numerous options. He goes into far more depth than many. I have far more respect for him because of his style.
If US start to QE, aka money printing, and UK follows, short term bonds should sell, not waiting for maturity. Calculate how second markets works and the price of your bonds.
Addressed questions very clearly I’ve struggled with despite spending a lot of time trying to understand bonds: 1) difference between funds and buying individual gilts, 2) Why are yields rather than prices quoted. Really helpful, thanks. Prompted me to do further learning. I guess tax “non-advice” is even farther out than investment “non-advice”. Worth mentioning here however that UK investors should look at the income tax and capital gains tax status of coupon payments and capital gains on gilts (clue the first is income taxable, the second is free of CGT). Comparing gilts with fixed rate savings (if ISAs and SIPPs not an option) means that tax status can make all the difference on which way to jump and even what type of gilts to buy. I say that because, tax aside, fixed rate savings are currently competitive with gilts at 1,2, 3 and 5 years.
Another excellent video and probably the best explanations of bonds I’ve come across. I’m a way from retirement but would definitely consider learning more in order to potentially implement it. What I would like to understand more is how many rungs a retirement plan would need. I assume anything that’s not going to be accessed for 10 years plus could sit in equities. The two immediate years on the horizon would be cash, so it’s the 3 to 10 year period that needs more of a balanced approach. Just need to figure that bit out in terms of what is directly held in bonds and how much in bond / equity funds. Thanks again Ramin. I will definitely become a member at some point!
I have a unique bond ladder with Wealthfront that actually automatically compounds the interest so all I had to do was make a 1 time deposit and just let it sit and do its thing until retirement without having to add anymore additional contributions to it.
Ok, so that was well-explained, thank you. But if for example you are looking to buy a 3 year bond from the list, are some better than others and if so, how do you choose?
Fabulous video as always and one I've been waiting for as many of your last few have pertained to buying single bonds and I've not understood how. Many thanks again.
Though with high inflation, plus higher rates offered on savings currently, bonds used in this way are only advantageous for particular situations e.g. larger amounts that need to be placed in a tax-free wrapper?
Yep. The US is setting the pace on yield on Treasuries but the frustration is that buying treasuries in the UK is not cost effective after allowing for commission/slippage/exchange rate fluctuations. The big question is whether we will see higher yields in the UK.
@@tastypymp1287 I actually believe we are facing stagflation. Governments create inflation through debt which is the best way of reducing the value of that debt through asset inflation. Old as the hills and goes back thousands of years. We are clearly facing the spectre of economic deflation as part of a continuing process which has been in place for many years now. They spin the reality into glib statements to hide the real facts from the average Joe.
@MartinJG100 While I agree in general, it's not quite as straight forward as that because of the creditors. They are savvy to this and demand compensation. If they don't receive, they stop buying government debt. This is already being observed with some major countries becoming net sellers of US treasuries. Imagine buying treasuries with a 0.25% yield. Who would buy them? Well, at the time the narrative was the world was about to collapse. It was about safety, the safest prospect of getting your capital back whole or at all. Other concerns like yield were dismissed. But then imagine then holding these bonds and the world didn't collapse. What's more, inflation jumps to circa 10% against your 0.25% yield. And the reason that inflation is so high is that the same country that sold you the debt is the same country that caused the inflation due to their irresponsible and irrational monetary and geopolitical policies. You'd probably want compensation. And thus you might be offered the opportunity to buy more debt, but at much more attractive yields....
The FT says 6 month yield for Gilts is 4%, but when I look at current price and work out annualised yield for gilts maturing in 31/1/23 and 22/7/23 the yields are more like 2.4% to 3.0% which is less than short duration gilts. Is the FT calculation wrong?
With UK bonds at significant negative yields this year and likely to be significantly negative again next year based on OBR and BoE forecasting a bond ladder constructed now using UK gilts would face very significant headwinds with regards the purchasing power of your fixed income. Far better to construct such a ladder when you are looking at positive real yields if you can.
John Ennis • 20 sec ago Another excellent video and probably the best explanations of bonds l've come across. l'm a way from retirement but would definitely consider learning more in order to potentially implement it. What I would like to understand more is how many rungs a retirement plan would need. I assume anything that's not going to be accessed for 10 years plus could sit in equities. The two immediate years on the horizon would be cash, so it's the 3 to 10 year period that needs more of a balanced approach. Just need to figure that bit out in terms of what is directly held in bonds and how much in bond / equity funds. Thanks again Ramin. I will definitely become a member at some point!
Yep, currently doing this with fixed income saving bonds. Yield 4-4.5% over various terms risk free. Also you can earn up to £1k per year (basic rate tax payer) interest without paying tax so if you’ve maxed out this years ISA allowance there’s still another grand to be had tax free.
Thought that bond ladder is prone to colapse following recent events in bond market. Also wow, we are finally mentioning DMO. Good luck buying Gilts from them. Spoiler: you will need patience combined with IQ above average. I'm bitter about bonds, I choose cash. It took me to long to realise this thanks to the fnancial channels advocating that bonds are negatively corelated to equities like some sort of axiom.
Why would it be prone to ‘collapse’? This would only happen if the gov defaulted. You know what you are going to get though you don’t know future inflation. Is that what you mean? There is far too little outrage out there towards financial advice regarding bonds and their supposed 1) non-volatiity compared to stocks and 2) negative corelation with stocks. This also includes the ‘risk rating’ on every fact sheet. All most advisors do is tell you the average of the last 100yrs; they do not assess current risks for you. All these middlemen make their money from a non-performance related cut, which is the biggest con in the finance world.
The long duration bond got punished as hard as stocks this year due to rising interest rates from close to 0%. The short duration bonds like T-bills are performing ok, they yield about 4.5% and you can hold them to maturity without any loss in principal. Compared to S&P 500 index loss of 18% this year, it's a safe haven. Therefore, bond is not a complete failure in the portfolio if you know what to hold at this time.
ramin what about bond etfs like "I SHARES I BOND TERM CORPORATE ETF" and "INVESCO BULLETSHARES CORPORATE BOND ETF" they kind of behave like holding a pool of bonds untill maturity dont you think? and are a bit diversified.
Question. - those coupons are paid out in cash at their date? Or held onto until the maturity payout. Also, do you create a separate portfolio to manage your bonds? I just have an RRSP & cash account right now. Thanks!
Hi Ramin. Really enjoying your videos and I have subscribed. The question I had with regards to bond was what you get back at maturity and the prevailing bond price. Let's say you buy a bond for £100 and hold it to maturity. But at maturity, because of prevailing interest rates, that bond is selling at that time for £95, on maturity, do you get back £100 or £95?
That wouldn't happen. At maturity you always get the face value, ie £100, by definition. Therefore the price would move towards £100 because nobody would sell a bond for £95 if you would shortly receive £100 for it.
Guarantees the amount of cash at set dates and means you don’t need to sell and face the market valuation. Wouldn’t liked to sell a gilt when interest rates shot up and prices fell.
As a novice investor, can somebody please kindly explain why a bond purchase may be better than say a 12 month fixed rate cash account, currently around 4.8% here in the UK? Thank you.
Is there much point in buying bond funds at the moment when you can get higher returns from high Street savings accounts? E.G 4-5% at Lloyd's compared to 1.7% vanguard bond funds
Lloyds does not have a savings account paying 4%.. Perhaps you are thinking of the Lloyds account attached to a mortgage application by a family member.
Answer it’s pointless 4.35% readily available for 1 year FCIS guaranteed fixed rate cash saved in a bank .. why take market risk on bonds with a lower yield .. It makes absolute zero sense
So, why then isn't there a Band Ladder fund where people can pay in and then elect whether or not to reinvest the principle on maturity with the und manager taking a small cut o the overall return to the investor? Investors then have 'bond fund' without the price variability.
Impossible to understand , what makes bonds go down in value . Why not simply put your money in a building society paying 3 or 4%. They seem an utter wastes of time . All my funds are going along nicely apart from my bonds which year after year earn at best 1 or 2 %
Not exactly risk free though. If you bought a 3 year 0.5% back in 2019 or whenever then you've locked in up to 3 years of loss if and when inflation and interest rates rise.
Ramin, are you aware of the idea, that when CBDCs are introduced, the bonds will stay on old fiat currency which value will be withering away as time passes and they are not used anymore? so you might have 10k in pound gilts that in 10 years might be 500 britcoins? It seems it has happened multiple times in history when there is a monetary reset
I don't think we are any closer to that, crypto is getting destroyed at the moment, any idea of it replacing existing currencies is probably further away from reality than at any point in the last 5 years.
You can get about 4% on a fixed 1 year savings account now, more when the Bank of England increase the rate soon and a lot more if you fix it for longer. Why would we want something that yields 3%?
He literally explains in the video why people use bond ladders and what the advantages are over equity funds and gives examples of when they might be used. He at no point says they are right for everyone's circumstances.
@@barnstar2077 Yea... it really is important information for those who want to travel back to the 90s when inflation was 3% and bond yields were at double digits ;p
Buying English bonds is risky as buying bonds from Argentina. Complete political mess + A economy that have no real output growth in ages. Better off buying Treasuries. But that is just my opinion on Bonds.
@@NedFlanders39 guarantee 1000 pounds, in 2030… that have an equivalent value of 10p as of now.. of course I’m exaggerating, but you get the idea. Mostly because of an economy in stand still + monetary policies and political decisions that doesn’t help the real economy.
@@imalebowski darling, let me tell you this: 1000 pounds in 2030 will be less valuable than it is today. The Govt is going to play that nominal 1000 pounds. If you are happy with, there is nothing to worry about… Since I know that my 1000 pounds will be less valuable in 10 years than today, I’ll be investing my money on something that covers the inflation for the period of time + pay some interest and fully repay the nominal principal. So, what I mean is, my cash flow needs to be: Interest + Inflation correction + the nominal principal. But, anyhow, you do you.
One of your best educational videos I think. Thank you
Wow, thanks @Graham Lewis
Thanks Ramin, was thinking about buying bonds myself for the 1st time :)
you need to commit plenty of capital.. £10k in a bond that pays 4% annually is still only £400 per year.. absolute peanuts..
Ramin: 'No one loves bonds quite as much as me'.
Also Ramin: 'I'm going 100% equity'.
Very clearly presented as always - I had some understanding of this but was never sure if had the correct understaning, the video made it very clear and the graphics crystalised the concept forever in my head - Thank you!
Excellent @Sachin Anshuman
Thank you so much for this video, finally makes sense!
You're welcome @bootador6638
Thank you Ramin. I’ve long wondered “why bond funds” - this video along with your recent chat on the Making Money Podcast has finally got the penny to drop for me.
Glad it was helpful! @HugoSomershamJones
I had 50% in bonds, mainly is US Treasury 40% 1-6 months, 10% in 12 months in retirement. Currently will fill out the ladder to 2 years with CDs as currently brokered CD rate is higher for >6 months when the bond matures.
Can people in the Uk but US bonds?
This was amazingly educational, thank you!
You're very welcome @Der Hoc
I had 40% in bonds until last year. I sold and had cash. Recently I purchased 10% of my investment into CD ladder from 3 month to 2 yr. Interest is about 4.5%. I am planning to add as Interest goes up.
4.5% in the UK? Where exactly?
@@davidyan7354 in US.
@@davidyan7354 You can get 4.6% from Shawbrook bank right now in the UK for a 2 year bond.
@@8G00SE8 Not if you want to keep your cash in your SIPP
I had no idea about bond ladders, but I think this will be the mechanism I'll use once I retire (in 45 or so years lol)
Thanks!
That's very kind of you @Dan l. Thank you!
Great explanation, thanks. I am currently getting 3.5% in Vanguard settlement fund/Federal money market, after fees, some in a tax deferred, another in a taxable. Variable rate, but very liquid, monthly payments.
Glad it was helpful! @Karl BE
"many of the people in the PensionCraft community locked in that high rate" ...Stretching the truth there...Way more of us also locked in to a lower rate way before that because of the advice in there 😂
No advice given here, just opinion,
@@jam99 Lol, yes of course- "THIS IS NOT FINANCIAL ADVICE" 🤭
@@greennewworld2718 That's right. You have to pay if you want 'financial advice'. Seriously, though, Ramin is not one of these YTers trying to tell you what you should be doing; he is more about educating us, enabling us to make our own personal risk assessments by asking the right questions, looking at sensible indicators and talking about the numerous options. He goes into far more depth than many. I have far more respect for him because of his style.
If US start to QE, aka money printing, and UK follows, short term bonds should sell, not waiting for maturity. Calculate how second markets works and the price of your bonds.
Addressed questions very clearly I’ve struggled with despite spending a lot of time trying to understand bonds: 1) difference between funds and buying individual gilts, 2) Why are yields rather than prices quoted. Really helpful, thanks. Prompted me to do further learning. I guess tax “non-advice” is even farther out than investment “non-advice”. Worth mentioning here however that UK investors should look at the income tax and capital gains tax status of coupon payments and capital gains on gilts (clue the first is income taxable, the second is free of CGT). Comparing gilts with fixed rate savings (if ISAs and SIPPs not an option) means that tax status can make all the difference on which way to jump and even what type of gilts to buy. I say that because, tax aside, fixed rate savings are currently competitive with gilts at 1,2, 3 and 5 years.
Are they competitive compared to inflation?
@@tastypymp1287 Rhetorical presumably (as well as pointless).
@@stuartb3502 Not an argument.
Try again ol sport?
That was very well explained. Thank you, sir.
Glad it was helpful @Mike Moreno
Another excellent video and probably the best explanations of bonds I’ve come across. I’m a way from retirement but would definitely consider learning more in order to potentially implement it. What I would like to understand more is how many rungs a retirement plan would need. I assume anything that’s not going to be accessed for 10 years plus could sit in equities. The two immediate years on the horizon would be cash, so it’s the 3 to 10 year period that needs more of a balanced approach. Just need to figure that bit out in terms of what is directly held in bonds and how much in bond / equity funds. Thanks again Ramin. I will definitely become a member at some point!
I have a unique bond ladder with Wealthfront that actually automatically compounds the interest so all I had to do was make a 1 time deposit and just let it sit and do its thing until retirement without having to add anymore additional contributions to it.
Very well explained, I am also thinking of investing into bonds.
Ok, so that was well-explained, thank you. But if for example you are looking to buy a 3 year bond from the list, are some better than others and if so, how do you choose?
Fabulous video as always and one I've been waiting for as many of your last few have pertained to buying single bonds and I've not understood how. Many thanks again.
Glad you like them @JohninRosc
Interesting perspective. A video about dividend stocks?
Great Video - Learned a lot - Thanks you!
Glad you enjoyed it @msprinz100
Ramin, could you make a video about how UK investor can practically get exposure to factors such as value and size?
Though with high inflation, plus higher rates offered on savings currently, bonds used in this way are only advantageous for particular situations e.g. larger amounts that need to be placed in a tax-free wrapper?
Yep. The US is setting the pace on yield on Treasuries but the frustration is that buying treasuries in the UK is not cost effective after allowing for commission/slippage/exchange rate fluctuations. The big question is whether we will see higher yields in the UK.
And inflation. You forgot inflation.
@@tastypymp1287 I actually believe we are facing stagflation. Governments create inflation through debt which is the best way of reducing the value of that debt through asset inflation. Old as the hills and goes back thousands of years. We are clearly facing the spectre of economic deflation as part of a continuing process which has been in place for many years now. They spin the reality into glib statements to hide the real facts from the average Joe.
@MartinJG100 While I agree in general, it's not quite as straight forward as that because of the creditors. They are savvy to this and demand compensation. If they don't receive, they stop buying government debt. This is already being observed with some major countries becoming net sellers of US treasuries.
Imagine buying treasuries with a 0.25% yield. Who would buy them? Well, at the time the narrative was the world was about to collapse. It was about safety, the safest prospect of getting your capital back whole or at all. Other concerns like yield were dismissed.
But then imagine then holding these bonds and the world didn't collapse. What's more, inflation jumps to circa 10% against your 0.25% yield. And the reason that inflation is so high is that the same country that sold you the debt is the same country that caused the inflation due to their irresponsible and irrational monetary and geopolitical policies.
You'd probably want compensation.
And thus you might be offered the opportunity to buy more debt, but at much more attractive yields....
The FT says 6 month yield for Gilts is 4%, but when I look at current price and work out annualised yield for gilts maturing in 31/1/23 and 22/7/23 the yields are more like 2.4% to 3.0% which is less than short duration gilts. Is the FT calculation wrong?
With UK bonds at significant negative yields this year and likely to be significantly negative again next year based on OBR and BoE forecasting a bond ladder constructed now using UK gilts would face very significant headwinds with regards the purchasing power of your fixed income. Far better to construct such a ladder when you are looking at positive real yields if you can.
Agreed, however all cash savings accounts are below the current bond yields. Hence if you need to stash cash this isn’t a bad approach.
I like this vid. Good insight.
Thanks @GerrysPlace
Hi Ramin, please make a video about structured notes.
John Ennis • 20 sec ago
Another excellent video and probably the best explanations of bonds l've come across. l'm a way from retirement but would definitely consider learning more in order to potentially implement it.
What I would like to understand more is how many rungs a retirement plan would need. I assume anything that's not going to be accessed for 10 years plus could sit in equities. The two immediate years on the horizon would be cash, so it's the 3 to 10 year period that needs more of a balanced approach. Just need to figure that bit out in terms of what is directly held in bonds and how much in bond / equity funds. Thanks again Ramin. I will definitely become a member at some point!
What about the same strategy, but fixed-term savings accounts?
Yep, currently doing this with fixed income saving bonds. Yield 4-4.5% over various terms risk free. Also you can earn up to £1k per year (basic rate tax payer) interest without paying tax so if you’ve maxed out this years ISA allowance there’s still another grand to be had tax free.
Thought that bond ladder is prone to colapse following recent events in bond market. Also wow, we are finally mentioning DMO. Good luck buying Gilts from them. Spoiler: you will need patience combined with IQ above average. I'm bitter about bonds, I choose cash. It took me to long to realise this thanks to the fnancial channels advocating that bonds are negatively corelated to equities like some sort of axiom.
Why would it be prone to ‘collapse’? This would only happen if the gov defaulted. You know what you are going to get though you don’t know future inflation. Is that what you mean? There is far too little outrage out there towards financial advice regarding bonds and their supposed 1) non-volatiity compared to stocks and 2) negative corelation with stocks. This also includes the ‘risk rating’ on every fact sheet. All most advisors do is tell you the average of the last 100yrs; they do not assess current risks for you. All these middlemen make their money from a non-performance related cut, which is the biggest con in the finance world.
Just to clarify, Ramin is not an advisor and I am not referring to him.
The long duration bond got punished as hard as stocks this year due to rising interest rates from close to 0%. The short duration bonds like T-bills are performing ok, they yield about 4.5% and you can hold them to maturity without any loss in principal. Compared to S&P 500 index loss of 18% this year, it's a safe haven. Therefore, bond is not a complete failure in the portfolio if you know what to hold at this time.
ramin what about bond etfs like "I SHARES I BOND TERM CORPORATE ETF" and "INVESCO BULLETSHARES CORPORATE BOND ETF" they kind of behave like holding a pool of bonds untill maturity dont you think? and are a bit diversified.
10 year fixed bond at 4.25%
Wonderful video.
Thanks for visiting @Iain Shirlaw Business English Coach
What about Canada? Could you outline similar plan/process for someone based on Canada?
Superb.
So thats what a yield curve is! :D
Thank you, very interesting.
You are welcome @Shimster IOM
Question. - those coupons are paid out in cash at their date? Or held onto until the maturity payout. Also, do you create a separate portfolio to manage your bonds? I just have an RRSP & cash account right now. Thanks!
Enjoyed this. Please consider doing an equivalent for TIPs and comparing the two types. Thanks
Nice video..but didnt address taxation...or did i miss it ?
Hi Ramin. Really enjoying your videos and I have subscribed. The question I had with regards to bond was what you get back at maturity and the prevailing bond price. Let's say you buy a bond for £100 and hold it to maturity. But at maturity, because of prevailing interest rates, that bond is selling at that time for £95, on maturity, do you get back £100 or £95?
That wouldn't happen. At maturity you always get the face value, ie £100, by definition.
Therefore the price would move towards £100 because nobody would sell a bond for £95 if you would shortly receive £100 for it.
bonds are only worth discussing while interest rates are up.. which they won't be for long..
Didn’t quite understand the concept of why you buy the bonds with different maturity dates. Why not just all 3YR bonds?
Guarantees the amount of cash at set dates and means you don’t need to sell and face the market valuation. Wouldn’t liked to sell a gilt when interest rates shot up and prices fell.
As a novice investor, can somebody please kindly explain why a bond purchase may be better than say a 12 month fixed rate cash account, currently around 4.8% here in the UK? Thank you.
great video, but have 1 question: is a bond ladder composed of treasuries considered cash or bonds?
Eh? Bonds are bonds, until you sell them into cash, or they mature into cash.
@@jam99 i believe that some consider short term treasuries to be cash equivalents. what about cds?
Is there much point in buying bond funds at the moment when you can get higher returns from high Street savings accounts? E.G 4-5% at Lloyd's compared to 1.7% vanguard bond funds
Lloyds does not have a savings account paying 4%.. Perhaps you are thinking of the Lloyds account attached to a mortgage application by a family member.
@@asmerom3025 was an example, but Nationwide offer 4% and im sure others offer the same or more dot dot dot
Answer it’s pointless 4.35% readily available for 1 year FCIS guaranteed fixed rate cash saved in a bank .. why take market risk on bonds with a lower yield .. It makes absolute zero sense
@@actuallythedog263 which UK banks or building societies are offering that much interest on 1 year fixed savings account
No, there is no point.
How do I buy bonds
What do you think of investment grade credit at this time?
a bond ladder... a B. Ladder.. bladder.. bladdered.. 😵
So, why then isn't there a Band Ladder fund where people can pay in and then elect whether or not to reinvest the principle on maturity with the und manager taking a small cut o the overall return to the investor? Investors then have 'bond fund' without the price variability.
They can’t make money off of it as they do with bond funds, because they can’t churn it.
Why would you not just do a year bond or a savings account that is a year long , you can get above 3.15% easily
Because you can lock the bond at ten years. Interest can be anything then.
Buy Argentina 🇦🇷 bonds at 49% 🤔
My online broker demands a minimum purchase of $5000. That means an investment of $25 000 for a ladder. Maybe not a problem for some people ……..
$TLT now?
Impossible to understand , what makes bonds go down in value . Why not simply put your money in a building society paying 3 or 4%. They seem an utter wastes of time . All my funds are going along nicely apart from my bonds which year after year earn at best 1 or 2 %
Not exactly risk free though. If you bought a 3 year 0.5% back in 2019 or whenever then you've locked in up to 3 years of loss if and when inflation and interest rates rise.
Didn´t see much mention of risk on Corporate bonds- clients could lose their entire capital.
This video is about gov bonds only.
Ramin, are you aware of the idea, that when CBDCs are introduced, the bonds will stay on old fiat currency which value will be withering away as time passes and they are not used anymore? so you might have 10k in pound gilts that in 10 years might be 500 britcoins? It seems it has happened multiple times in history when there is a monetary reset
I don't think we are any closer to that, crypto is getting destroyed at the moment, any idea of it replacing existing currencies is probably further away from reality than at any point in the last 5 years.
Passive income is far from the info provided
Bond ladder has low yields. 3 % ? Who wants this ?
Clearly, there are a lot of morons around, personally I'm in gold and silver I just come here for the comedy ;D
You can get about 4% on a fixed 1 year savings account now, more when the Bank of England increase the rate soon and a lot more if you fix it for longer. Why would we want something that yields 3%?
He literally explains in the video why people use bond ladders and what the advantages are over equity funds and gives examples of when they might be used. He at no point says they are right for everyone's circumstances.
@@barnstar2077 Yea... it really is important information for those who want to travel back to the 90s when inflation was 3% and bond yields were at double digits ;p
@@crashnreset6987 - It isn't about yields, again, if you watched the video you would know that.
Buying English bonds is risky as buying bonds from Argentina.
Complete political mess + A economy that have no real output growth in ages.
Better off buying Treasuries.
But that is just my opinion on Bonds.
How is it risky if it's a guaranteed payment?
@@NedFlanders39 guarantee 1000 pounds, in 2030… that have an equivalent value of 10p as of now.. of course I’m exaggerating, but you get the idea.
Mostly because of an economy in stand still + monetary policies and political decisions that doesn’t help the real economy.
@@zanychelly the points you make are why one would buy bonds. 🤣
@@helixvonsmelix Sure. Go on buying debt.. while England prints money, and default by inflation.
@@imalebowski darling, let me tell you this: 1000 pounds in 2030 will be less valuable than it is today. The Govt is going to play that nominal 1000 pounds. If you are happy with, there is nothing to worry about…
Since I know that my 1000 pounds will be less valuable in 10 years than today, I’ll be investing my money on something that covers the inflation for the period of time + pay some interest and fully repay the nominal principal.
So, what I mean is, my cash flow needs to be: Interest + Inflation correction + the nominal principal.
But, anyhow, you do you.