📢 We've launched! Get 15% off our brand-new bond courses thru 11:59PM ET on 4/30/2024 for Financial Literacy Month - enter coupon code bondfans2024 at checkout - see links below for more details! ⭐ Bond Beginners (our foundational-level bond course): www.diamondnestegg.com/bond-beginners ⭐ Bond Masters (our intermediate-level bond course): www.diamondnestegg.com/bond-masters ⭐ Or get both & save $100: www.diamondnestegg.com/home#_paa2isucf ⭐ Join our super-supersaver membership for regular market updates & monthly live member Q&As 👉 ua-cam.com/channels/nexoc6tvesvcCEzZhmI-Ag.htmljoin #jenniferlammer #bonds #fixedincome Thanks for visiting our personal finance channel! We hope this content will help fast-track your financial journey! Everyone's financial journey is different. Please note that: 1) there are questions/ comments which I will not be able to answer without fully understanding your financial, personal & other circumstances & 2) we will not ask you to call us or send us money in the comments on this channel or any of our other social media accounts, so if you see comment(s) along those lines, it is most likely spam - PLEASE DO NOT ENGAGE WITH SPAMMERS OR GIVE OUT YOUR PERSONAL INFORMATION FOR YOUR OWN SAFETY.
Your videos helped me setup my own income generation plan for the past 2 years. You helped me understand bond market, how to buy and stay informed. Thank you!
Can you make a step by step video about - How to sell Treasury Notes & Bonds On Fidelity (Step-By-Step) | Secondary Market please. That will complete the whole process. Thanks
You are the best! Buying bonds on the secondary market has always been a bit of a mystery to me but your tutorial has answered my questions! Thank You.
Thank you for this video! Just bought two secondary market bonds in the early 2030s to complete a bond ladder. So nice that to have that to offset market unknowns.
Interesting example. So the bond you chose matures in 2042 and has a yield to maturity %4.966. Taking a quick look at TD result for latest 20-yr bond auction maturing in 2043 fetched a yield of 4.780%. Now we can see the difference in yields by buying similar bond at TD auction vs secondary market. Thanks!
So it seems the difference between older bonds and new bonds is when you want the money. A new bond with a higher interest rate you would get more interest every 6 months but basically get your money back when it matures. An older bond with a lower interest rate you would get less interest every 6 months but on maturity you’d get the full amount of the bond so a lump sum for the difference you paid. Interesting. I’ve been just doing new issues but may look into secondary. Thanks!
Hi Diamond, do you think buying a 30 year treasury is a good long term plan? And how difficult is it to sell a 30 year treasury note on the treasury website? Maybe you could make a video on that. Love your videos, keep it up.
Thanks for detailing the search options, Jen. Can you go through an example on Merrill? Does the approx. $73 a share in your example trigger capital gains bec it was so under $100 par?
Jennifer, could you do a video on buying mortgage back securities on Fidelity? I can’t figure out how to locate MBS on the Fidelity web site. Your videos are so good that I’m sure the idea would be a big help to me and others! Thanks
Thank you for this great video! Could someone please explain the difference between coupon and ask (yield to worse) when it comes to bonds at the 4:25 min mark please?
We have a member video on Treasury zeros coming out today that should help clarify some of these terms. Let us know if more detail is required after that.
Thank you for the explanation. To make sure that I understand: Does that mean that you bought a $1000 coin for $744.06, and then you will be getting 4.955% of $1000 annually (paid biannually)? So if maturity were, for example, 1 year, then after one year, you would have earned : 1000*1.04955 - 744.06 = $305.5 Is that correct?
So since the bond's face value is $1,000 and the prices are listed with face value of $100, we would have to multiply the price by 10 to find out how much we are actually going to have to pay? Why are prices and quantities listed differently like this? And why is there a minimum amount on the bond?
thanks Jen . If folks are buying small quantity like $1000 as u mentioned , then the first screener listing YTM in descending order won’t help because the rates change if we buy just $1000 . Is there a way to look at screener realistically what are the rates for the small amount we are buying ? Thanks
If you click on the little book icon (Depth of Book column), another screen will pop up. Look for the price/ YTM that is associated with a minimum quantity of 1 - it should appear as (1).
Thanks for the video Jenn. Great information as always. I have a question. I'm looking to buy a municipal bond on Fidelity on the secondary market. Do I HAVE to use the ASK PRICE? I tried putting in a lower ask but it never gets filled. Do my orders get sent to the owner and they review if they want to accept my offer? Or do they they put in the ASK PRICE and it automatically rejects my order if it's lower?
can you do a video regarding buying ibonds now are waiting until May? Will the fixed rate go up? Down? Is there a difference waiting a few months vs buying now? I ask because it is a new year and I like the idea of buying at 1.3% fixed so I am ready to buy now. However, if the rate will go up to 1.75 or 2%, it makes sense to wait, yes?
When I was following along with your tutorial, I noticed that on the "yields" tab of the "Fixed Income, Bonds, & CDs" page, Fidelity has a category called "U.S. Treasury Zeros." I understand that those don't pay any interest until they mature (like the Treasury Bills), but they have longer maturity dates of as long as 30 years. What would the advantages/disadvantages be of buying Zeros compared to normal treasuries? I would like to see a video on that! Thanks, as always, for your wonderful videos!
Zero’s advantage is that the interest not paid is being compounded at the same interest rate. A disadvantage is that you still need to report that interest and be taxed on it each year even if it is not being paid out to you until maturity. Is sort of a phantom yearly income.
Hi Jennifer I delivered a Gift Cert yesterday and could not figure out how to do the W/H. I saw the W/H tab but it wasn't illuminated and would not take the selection. Do you think it has to be done prior to starting the delivery process? Hope I explained this sufficiently.
I'm assuming you mean you delivered an I-Bond gift to someone? If that's the case, your recipient can do the withholding in their account now that you delivered the I-Bond. Here is the video on how to do it: ua-cam.com/video/PEWRMfbNgLs/v-deo.html
Can you do a video that goes deeper into the selection trade offs for Treasury securities? The simplified approach looks at YTM. But we see that for the same time horizon and YTM, there is a range of coupon rates and bond prices. How do you weigh the trade off? If I understand this correctly, a higher coupon means along the way, the income will be higher - which I like since I'd get regular higher income. On the other hand, a lower price means I pay less now but get back the face value at maturity, and the money I did not spend to buy the bond could be separately invested. But is there a more analytical approach to this selection or does it not matter?
I had this very same question and I think the answer depends on your goal. If current income is the goal then I personally would be hunting for the highest coupons. I however was interested in highly discounted bonds with decent YTM but my goal was capital appreciation. My thesis now is that there is a rip roaring treasury rally in our future. I didn't buy my 2.875% coupon USTs for the income but I don't want to hold onto them until 2043 either. At $72 per $100 I'm hoping for a $28 price increase to par, which is a 39% gain. Hope that helps!
Hi great content. If one invests in 2 yr t bills at 4.6%. If rates go down in one yr. Would u say one will lose money on principle investment if sells a year before maturity ?
Hello there! Quick question. What are you thoughts on selling the mutual funds I have in my IRA and buying t bills. Over the past 5 years, since I am not adding anything else to it. It's basically been stagnant (goes up and down but not makign anymovement) Should I sell what I currently have and purchase t-bills where I at least get something back on it? Thanks.
Hello I love your videos, you have taught me a lot in a very short time because you are clear, concise and to the point, thank you for that. Your info is top notch. Can you please answer me one question? With 4 week Tbills at 5.2% if I take my 10k and buy 10 tbills, i will get 10500 back. I do that again, another 10500, now I can do 11 Tbills and get 10550 back, 11 tbills again 10550 back. Now month 5 i can do 12 Tbills. All assuming a 5% rate. If this keeps up you can turn by 10k into 36k in 24 months. Is that unreasonable?
Thanks for the message. We're trying to wrap up some big projects and looking forward to being back at the beginning of March with some brand new content! Eva
Hi Jen, This is one of my favorite videos right now. I followed the steps but with the goal of buying TIPS in the secondary market. I found a TIPS maturing on Jan-25 with a YTM of 3.187% (CUSIP 912810FR4). A one-year T-bill is paying as of (01/08/24) 4.83%. Thus the breakeven inflation rate is 4.83 - 3.187 = 1.643%, which is impossible to reach by 2025. Am I missing something? This TIPS looks too good to be true. Thank you for your insight on this.
Hi Armando - It's a bit difficult to say whether this is "too good to be true" or not. The TIPS you're referencing has an inflation index of 1.63117 - meaning you would be buying about 60ish% of extra principal (a rather large amount). The market's speculation around inflation/ disinflation/ deflation might be what's impacting the real yield discrepancy. Also, the coupon - from the quick look that I took - seems a bit below what the market rate is for a 1-year TIPS.
Hi Jen @@DiamondNestEgg, thanks for your detailed reply. Indeed, many investors may not be willing to buy this extra principal (~60%) since it is not protected against deflation. I bought a TIPS with a much lower inflation factor (1.025080) and a real yield of 1.92%, which is good enough for me. The coupon is 1.25%, which may not be bad if rates continue downward. Buying TIPS on the secondary market is complicated but I think I have figured out all the parameters involved. Perhaps you could consider a video on this in the future, given that you have your hands full with the "putting all together" at this time.
How to sell Treasury Notes & BONDS on Fidelity would certainly be helpful. With recent interest rates falling why didn’t you buy that Bond? ( What time frame are referencing?)
Happy New Year John! We are well - very busy working on some projects so that we can get back to UA-cam as soon as possible. If you're not on our mailing list, consider joining at www.diamondnestegg.com. We'll be making some announcements soon - all the best until then.
I would love to learn how to do this on Schwab website. Your step-by-step tutorials are fabulous and easy to follow. I have learned a lot and can now do things from memory. One additional thing, given my age, a 20 or 30 yr bond isn’t something I will want to hold to maturity. What are other strategies for buying longer term bonds that are worth considering. Thanks!
Higher for longer "seems" to be fading fast even though nothing has really changed regarding the need to fund government debt and spending. What should those sitting in T-bill ladders who will need income over the next few years be doing?
Hi there - I hope you quite our member live last Friday. I give a bond update there & answer quite a few questions about what is happening right now with Treasury yields, expectations, etc
Can you make a video on CDFIs? I think there very little information on UA-cam and for many of us CDFIs sound like good way to invest responsibly/ethically nowadays that the government is fixated on getting involved in armed conflicts.
Very cool, and well done! I followed along with my own Fidelity account in another window and it was super simple. And ... when did you create custom emojis for us?! 🥳
I generally pay less than the original auction price relative to term. Have payed above par to get rate just a couple times. Consider the term remaining of tbills to kick income into next year or specific quarter
Thanks for checking in! We are finishing up some big projects and will be back on UA-cam at the end of the month/ beginning of March with brand new videos!!!
Hey Michael. Thanks for the note! We’re trying to wrap up some big projects at the moment, but will be back with brand new content at the end of Feb/ beginning of March so stay tuned.
📢 We've launched! Get 15% off our brand-new bond courses thru 11:59PM ET on 4/30/2024 for Financial Literacy Month - enter coupon code bondfans2024 at checkout - see links below for more details!
⭐ Bond Beginners (our foundational-level bond course): www.diamondnestegg.com/bond-beginners
⭐ Bond Masters (our intermediate-level bond course): www.diamondnestegg.com/bond-masters
⭐ Or get both & save $100: www.diamondnestegg.com/home#_paa2isucf
⭐ Join our super-supersaver membership for regular market updates & monthly live member Q&As 👉 ua-cam.com/channels/nexoc6tvesvcCEzZhmI-Ag.htmljoin
#jenniferlammer #bonds #fixedincome
Thanks for visiting our personal finance channel! We hope this content will help fast-track your financial journey! Everyone's financial journey is different. Please note that: 1) there are questions/ comments which I will not be able to answer without fully understanding your financial, personal & other circumstances & 2) we will not ask you to call us or send us money in the comments on this channel or any of our other social media accounts, so if you see comment(s) along those lines, it is most likely spam - PLEASE DO NOT ENGAGE WITH SPAMMERS OR GIVE OUT YOUR PERSONAL INFORMATION FOR YOUR OWN SAFETY.
GM announced this weekend selling direct to consumers, cutting out middleman!
Did we miss the peak of treasury yield?
Your videos helped me setup my own income generation plan for the past 2 years. You helped me understand bond market, how to buy and stay informed. Thank you!
Can you make a step by step video about - How to sell Treasury Notes & Bonds On Fidelity (Step-By-Step) | Secondary Market please. That will complete the whole process. Thanks
Good suggestion. I would love to see a video a this too so I can understand how firms calculate the yield at point of sale
You are the best! Buying bonds on the secondary market has always been a bit of a mystery to me but your tutorial has answered my questions! Thank You.
Thank you! I have learned so much from you in the last few months. Another great video.
I happen to have a Fidelity acct so this was very helpful information. Thanks for explaining it so nicely 👏
Thank you for this video! Just bought two secondary market bonds in the early 2030s to complete a bond ladder. So nice that to have that to offset market unknowns.
I had assumed that the minimum quantity they specified was final and I could not buy any less. Thanks for that info Jen!
Thanks Jennifer. Very thorough and informative.
Interesting example. So the bond you chose matures in 2042 and has a yield to maturity %4.966. Taking a quick look at TD result for latest 20-yr bond auction maturing in 2043 fetched a yield of 4.780%. Now we can see the difference in yields by buying similar bond at TD auction vs secondary market. Thanks!
So it seems the difference between older bonds and new bonds is when you want the money. A new bond with a higher interest rate you would get more interest every 6 months but basically get your money back when it matures. An older bond with a lower interest rate you would get less interest every 6 months but on maturity you’d get the full amount of the bond so a lump sum for the difference you paid. Interesting. I’ve been just doing new issues but may look into secondary. Thanks!
Thank you for detailed explanation. Still get confused about the price listed and what I pay.😅need to watch this a few times.
Hi Diamond, do you think buying a 30 year treasury is a good long term plan? And how difficult is it to sell a 30 year treasury note on the treasury website? Maybe you could make a video on that. Love your videos, keep it up.
Thanks for detailing the search options, Jen. Can you go through an example on Merrill? Does the approx. $73 a share in your example trigger capital gains bec it was so under $100 par?
Noted on the Merrill requests!
That's was great and awesome 👍 thank you very much
Have we missed the peak of treasury yield?
Jennifer, could you do a video on buying mortgage back securities on Fidelity? I can’t figure out how to locate MBS on the Fidelity web site. Your videos are so good that I’m sure the idea would be a big help to me and others! Thanks
Thank you for this great video!
Could someone please explain the difference between coupon and ask (yield to worse) when it comes to bonds at the 4:25 min mark please?
We have a member video on Treasury zeros coming out today that should help clarify some of these terms. Let us know if more detail is required after that.
Awesome, thank you Jennifer!@@DiamondNestEgg
Wonderful tutorial
Does your purchased bond or note remain in your portfolio electronically
Thank you for the explanation.
To make sure that I understand: Does that mean that you bought a $1000 coin for $744.06, and then you will be getting 4.955% of $1000 annually (paid biannually)?
So if maturity were, for example, 1 year, then after one year, you would have earned :
1000*1.04955 - 744.06 = $305.5
Is that correct?
This was great! Please do a corresponding step by step for Schwab very soon.
So since the bond's face value is $1,000 and the prices are listed with face value of $100, we would have to multiply the price by 10 to find out how much we are actually going to have to pay? Why are prices and quantities listed differently like this? And why is there a minimum amount on the bond?
T bill rates are going lower and lower every day. Will this be the trend from now on?
Please do a video on de minimis rule that applies to treasuries bought in secondary market. This is what prevents most from buying in secondary.
thanks Jen . If folks are buying small quantity like $1000 as u mentioned , then the first screener listing YTM in descending order won’t help because the rates change if we buy just $1000 . Is there a way to look at screener realistically what are the rates for the small amount we are buying ? Thanks
If you click on the little book icon (Depth of Book column), another screen will pop up. Look for the price/ YTM that is associated with a minimum quantity of 1 - it should appear as (1).
1099-INT is now available on Treasury Direct.
Thanks for the video Jenn. Great information as always. I have a question. I'm looking to buy a municipal bond on Fidelity on the secondary market. Do I HAVE to use the ASK PRICE? I tried putting in a lower ask but it never gets filled. Do my orders get sent to the owner and they review if they want to accept my offer? Or do they they put in the ASK PRICE and it automatically rejects my order if it's lower?
Which account should I open in Fidelity to buy Treasury bills?
can you do a video regarding buying ibonds now are waiting until May? Will the fixed rate go up? Down? Is there a difference waiting a few months vs buying now? I ask because it is a new year and I like the idea of buying at 1.3% fixed so I am ready to buy now. However, if the rate will go up to 1.75 or 2%, it makes sense to wait, yes?
We'll be doing an update soon
When I was following along with your tutorial, I noticed that on the "yields" tab of the "Fixed Income, Bonds, & CDs" page, Fidelity has a category called "U.S. Treasury Zeros." I understand that those don't pay any interest until they mature (like the Treasury Bills), but they have longer maturity dates of as long as 30 years. What would the advantages/disadvantages be of buying Zeros compared to normal treasuries? I would like to see a video on that! Thanks, as always, for your wonderful videos!
Zero’s advantage is that the interest not paid is being compounded at the same interest rate. A disadvantage is that you still need to report that interest and be taxed on it each year even if it is not being paid out to you until maturity. Is sort of a phantom yearly income.
Thank you for that information!@@J-2024-v8i
What’s the difference between coupon and yield ?
Hi Jennifer
I delivered a Gift Cert yesterday and could not figure out how to do the W/H. I saw the W/H tab but it wasn't illuminated and would not take the selection.
Do you think it has to be done prior to starting the delivery process?
Hope I explained this sufficiently.
I'm assuming you mean you delivered an I-Bond gift to someone? If that's the case, your recipient can do the withholding in their account now that you delivered the I-Bond. Here is the video on how to do it: ua-cam.com/video/PEWRMfbNgLs/v-deo.html
How is survivor option handled on Treasuries and Bonds?
Can you do a video that goes deeper into the selection trade offs for Treasury securities? The simplified approach looks at YTM. But we see that for the same time horizon and YTM, there is a range of coupon rates and bond prices. How do you weigh the trade off? If I understand this correctly, a higher coupon means along the way, the income will be higher - which I like since I'd get regular higher income. On the other hand, a lower price means I pay less now but get back the face value at maturity, and the money I did not spend to buy the bond could be separately invested. But is there a more analytical approach to this selection or does it not matter?
I had this very same question and I think the answer depends on your goal. If current income is the goal then I personally would be hunting for the highest coupons. I however was interested in highly discounted bonds with decent YTM but my goal was capital appreciation. My thesis now is that there is a rip roaring treasury rally in our future. I didn't buy my 2.875% coupon USTs for the income but I don't want to hold onto them until 2043 either. At $72 per $100 I'm hoping for a $28 price increase to par, which is a 39% gain. Hope that helps!
Hi great content.
If one invests in 2 yr t bills at 4.6%. If rates go down in one yr. Would u say one will lose money on principle investment if sells a year before maturity ?
Hello there! Quick question. What are you thoughts on selling the mutual funds I have in my IRA and buying t bills. Over the past 5 years, since I am not adding anything else to it. It's basically been stagnant (goes up and down but not makign anymovement) Should I sell what I currently have and purchase t-bills where I at least get something back on it? Thanks.
Hello I love your videos, you have taught me a lot in a very short time because you are clear, concise and to the point, thank you for that. Your info is top notch. Can you please answer me one question?
With 4 week Tbills at 5.2% if I take my 10k and buy 10 tbills, i will get 10500 back. I do that again, another 10500, now I can do 11 Tbills and get 10550 back, 11 tbills again 10550 back. Now month 5 i can do 12 Tbills. All assuming a 5% rate. If this keeps up you can turn by 10k into 36k in 24 months. Is that unreasonable?
You will not get 10500 back after 4 weeks. You will only get approximately $40. 5.2% is the yearly yield, not the 4 week yield.
hi can i buy 80k or 120 k t bills per year ? or its a limit ? thanks
Has she stopped making vids? Been gone a long time.
Thanks for the message. We're trying to wrap up some big projects and looking forward to being back at the beginning of March with some brand new content! Eva
Hi Jen, This is one of my favorite videos right now. I followed the steps but with the goal of buying TIPS in the secondary market. I found a TIPS maturing on Jan-25 with a YTM of 3.187% (CUSIP 912810FR4). A one-year T-bill is paying as of (01/08/24) 4.83%. Thus the breakeven inflation rate is 4.83 - 3.187 = 1.643%, which is impossible to reach by 2025. Am I missing something? This TIPS looks too good to be true. Thank you for your insight on this.
Hi Armando - It's a bit difficult to say whether this is "too good to be true" or not. The TIPS you're referencing has an inflation index of 1.63117 - meaning you would be buying about 60ish% of extra principal (a rather large amount). The market's speculation around inflation/ disinflation/ deflation might be what's impacting the real yield discrepancy. Also, the coupon - from the quick look that I took - seems a bit below what the market rate is for a 1-year TIPS.
Hi Jen @@DiamondNestEgg, thanks for your detailed reply. Indeed, many investors may not be willing to buy this extra principal (~60%) since it is not protected against deflation. I bought a TIPS with a much lower inflation factor (1.025080) and a real yield of 1.92%, which is good enough for me. The coupon is 1.25%, which may not be bad if rates continue downward. Buying TIPS on the secondary market is complicated but I think I have figured out all the parameters involved. Perhaps you could consider a video on this in the future, given that you have your hands full with the "putting all together" at this time.
Happy holidays
How to sell Treasury Notes & BONDS on Fidelity would certainly be helpful. With recent interest rates falling why didn’t you buy that Bond? ( What time frame are referencing?)
Haven't seen a video in a month, hope all is well.
Happy New Year John! We are well - very busy working on some projects so that we can get back to UA-cam as soon as possible. If you're not on our mailing list, consider joining at www.diamondnestegg.com. We'll be making some announcements soon - all the best until then.
I would love to learn how to do this on Schwab website.
Your step-by-step tutorials are fabulous and easy to follow. I have learned a lot and can now do things from memory.
One additional thing, given my age, a 20 or 30 yr bond isn’t something I will want to hold to maturity. What are other strategies for buying longer term bonds that are worth considering. Thanks!
Higher for longer "seems" to be fading fast even though nothing has really changed regarding the need to fund government debt and spending. What should those sitting in T-bill ladders who will need income over the next few years be doing?
Hi there - I hope you quite our member live last Friday. I give a bond update there & answer quite a few questions about what is happening right now with Treasury yields, expectations, etc
@@DiamondNestEgg can you please also do a video for non-members? I am sure many many people will be very thankful!
wheres the best place to store money for 5 months? rates would CD or bonds pay more
Can you make a video on CDFIs? I think there very little information on UA-cam and for many of us CDFIs sound like good way to invest responsibly/ethically nowadays that the government is fixated on getting involved in armed conflicts.
Are they insured? Do they offer robust returns? How to access them?
Do you think treasury bills have peaked? Please inform
ua-cam.com/users/liveDhtNdLJMDgY?si=fo-gidzB5VaroVgy
Thanks
so good
Where do you see fidelity fees
Very cool, and well done! I followed along with my own Fidelity account in another window and it was super simple.
And ... when did you create custom emojis for us?! 🥳
:-) Those member emojis have been there for awhile. Glad you found them!
I always buy on auction date.Why buy in secondary market? Don’t we pay more? In secondary market market
I generally pay less than the original auction price relative to term. Have payed above par to get rate just a couple times. Consider the term remaining of tbills to kick income into next year or specific quarter
As I have heard Jen say before on the secondary market you know exactly how much you are paying.
Where are you putting savings now? Best high yield savings accounts
Um, it's now the middle of Februray. Do you intend to start posting again.
Hi. Jennifer has planned a video for today. Thanks for your patience. Eva (Team DNE)
Curious if you still believe interest rates have not peaked for this cycle?
Hello ,how you doing,everything ok for ,because for some time i never received any video from you,hope everything fine for.
Thanks for checking in! We are finishing up some big projects and will be back on UA-cam at the end of the month/ beginning of March with brand new videos!!!
Where are you?
We need you now!
ua-cam.com/users/liveDhtNdLJMDgY?si=fo-gidzB5VaroVgy
Are you still expecting the Yields going up or do you think that it’s over?
I have not seen any new videos in awhile. 😢
Hey Michael. Thanks for the note! We’re trying to wrap up some big projects at the moment, but will be back with brand new content at the end of Feb/ beginning of March so stay tuned.
@@DiamondNestEgg thank you for the update!