Rob - The way you organize your thoughts is absolutely FABULOUS. I’ve never really understood bonds so I’ve avoided them. Until now! In 45 minutes, you cleared up my confusion and I now have the confidence to consider including them in my asset allocation. I’m within 7 or 8 yrs of retirement so it’s high time. Thank you!
This is the best introduction video on bond investing I've come across in a long time. Instant subscribe! Please never stop educating the world with your knowledge and the fascinating delivery of that knowledge.
Great video!! I think there's one small issue at 3:22, when you talk about a $10K bond with 2% interest ($20). The video says, "Whatever the interest is, you're going to get that every 6 months." I interpret that to mean you'll receive $20 every 6 months, but I think you meant $20 per year split into 2 installments. Otherwise the bond would pay $40/year or a 4% coupon. Anyway, loved the video -- super informative.
2 years after the video was aired Rob Bergers strategy to invest half in traditional bonds and half in TIPS (following David Swansons approach) was very good. Despite their negative yield at the time. As he said "just in case inflation rises"... Same with his attitude towards the hyped ARK Funds: just before their total decline he explained why he would never invest into them.
I have been trying to understand this for over a month now- yield, bond fund prices, interest rates, etc. An explanation that could make sense to me was not to be found in all the content I’ve consumed in the past 4-5 weeks: audiobooks, podcasts, blogs, Reddit… I just finished watching this and I FINALLY “get” bonds/bond funds. And it’s literally only because of your video. Your explanation of why purchasing your own bonds may not be practical was the missing piece to tie it all together. I just could not understand why anyone would buy into a bond fund instead of purchasing their own at a rate they found agreeable. I felt like I was missing an important piece of the puzzle (and I definitely was!). Thanks so much for taking the time to share your explanation- it was the version that finally made it click. :)
I’m a new investor and spent probably several days of research getting a grip of the fundamentals of bonds and bond funds. Had a just watched this video I would have been set. Clear and concise. I would LOVE for you to do a future video in the same fashion explaining TIPS and TIPS funds. Still trying to get a grasp on the fundamental and utility of that investment option.
I’m a tax accountant and often work with original issue discounts and bond premiums (and their amortization) on tax returns. You explained this so well for everyone to understand. 😊. Thank you!
I buy individual bonds, and don't find it a problem to keep records. I like 'em because I know exactly what my return is. Occasionally I sell one but then I have to figure capital gain/loss, which is a pain. My bond portfolio is about 600K, half in IRA. I just want people to know it's doable (and fun to pick out bonds). During Covid, airline bonds were an amazing deal. Should sell them now, maybe I will....
Thank you Rob for explaining bonds investments in clear and simple terms. I was trying to understand for long why bond ETFs (VGLT, BND) are paying so low compared to S&P 500 (VOO) in last 5 and 10 years. And was avoiding investing in bonds due to it. I am planning to invest in I- bonds and BND for my 20% allocation in bonds.
Hi Rob, thank you for what you do. The way you explained the concepts was easy to follow for beginners. I wish I had someone like you teaching me in school. You would be a great professor.
I've been searching for a while for an explanation of bonds with this level of depth and clarity, and I'm delighted that I kept looking! This is precisely the introduction that I needed, explaining the terminology and investing strategies in a straightforward way. Thanks so much for your work!
Wow - thanks for the thorough explanation and your taking the time to educate your viewers. Respect. I learned something very useful other than the basics - to not be too alarmed about short term changes in the interst rates/bond prices and if you're a longterm investor in BOND mutual funds/etfs you can be assured that fund will correct over time in response to the market. Crazy that you only have 20-30k subs for so much great information/education.
I've been investing in bond funds for more than 30 years and I feel like I understand them for the first time! Thank you so much! You are a fantastic teacher!
Thanks for the info. I have in the past stayed away from bond funds because of low yields and lack of good understanding how they work. As I enter retirement I am rebalancing my portfolio and may use bonds in place of some CD's which pay even less. Been enjoying your content.
Rob. Thanks for this video. A very clear explaination. It's an area of my portfolio that I didn't quite grasp..until now. I really enjoy your channel --you make things much easier to grasp
Rob, thank you for making this video! I understand the relationship between interest rates and individual bond prices, but I’ve always wondered how it affected a bond ETF or mutual fund. I’ve never heard anyone else address this topic before. Your explanation makes me a bit more comfortable keeping some bonds in my portfolio going forward with the risk of rising rates. They are kind of like dividend stocks in that even if their price goes down, their yield goes up! I look at it as a win win either way with both. On a side note, I love your laid back, calm presentation style, and lack of click bait titles👍
After 37+ years in IT working for an inter-dealer brokerage whose clients are mostly the banks and primary dealers in US securities, your concepts are spot-on, but my goodness, your math lol. ;-)
Thanks Rob. Really helpful. The only thing I don’t think you touched on was selling out of your bond fund. If you wait until maturity on a treasury bond, you get your principle back, weather or not rates have gone up or down. What happens in a bond fund as there is no maturity date? If in 5 or 10 years you want to sell but the fund has lost value, isn’t that a risk compared to holding a 5 year or 10 year treasury to maturity? Thanks!
Thank you so much for this. This was super helpful and very educational. I learned so much and the way you explain was very clear and easy to understand!
Excellent overview, even for a neophyte like me. One addition, I would suggest looking into BNDW, which is Vanguard's world bond fund - currently ~50/50 BND / BNDX (so 50/50 US and international bonds). Up to you, and your hedging needs.
What is the difference between the 12 month yield (or TTM) and SEC yield? I understand the TTM is the dividend (or distribution) annualized, but where does the SEC yield come from and how is it useful?
This an excellent explanation of one of the most distasteful subjects: bonds. Most investors buy bonds to counter balance the rise and falls of stocks. But so many times they don't inversely correlate. I know bonds correlate to interest rates but still...these buggers are just frustrating. Bond price goes up and yields go down...this is so confusing for the laymen...
@Rob Berger, thank you for this great video. I just want to clarify your example on the coupon rate. Coupon rates are annualized. The example that you cited, the $1000 bond with a 2% nominal yield would be paying $10 every six months not $20 as you stated. The $20 is the annual coupon. Therefore, the holder of that bond would receive half of the annual rate for every six months such holder held on to that bond.
I think single bonds are the preferred approach as they guarantee you won’t make a loss. You might get a low return and get frustrated when you see better deals but having a ladder to cover a 2-3 year market issue would be better than a fund, your on a journey.
Please do an update for 2023, when rates have gone up the way they have. Not a new video maybe, but something to add onto this one. Maybe during that video, you could also contrast how bonds look to the investor in the period of time in this video, versus current. And maybe you could say, the best time to buy Xtype of bond would have been DATE, and this other type of bond DATE, because, but the worst time would have been DATE because. And maybe you could talk about the new SGOV etf and compare it.
Great video I’ve learned more about bonds in this video than all the other ones I’ve watched combined.👏👏👏 one question though how could you have not seen that inflation was coming?🤔 nevertheless great video.👍
This is a great video! Well done! I do have a question. When you buy a bond fund (let's say Vanguard's BND), do you make money simply from the appreciation of the NAV or do you also get money from the coupon payments? Thanks for this good info!
I'm surprised you are not a fan of bond ladders! They are super easy to construct and maintain. Schwab actually has a tool that makes it extremely convenient and logical. I was in the Vanguard Total Bond Mutual Fund and then ETF for years and it has been a complete dog. At least with the bond ladder I can basically dampen fluctuations in interest rates.
I have been loving your videos and have been watching them all of the time. I'm just starting to learn about bonds and right now am at around 99% stocks in my portfolio. With an account like Fidelity cash management SPAXX being at around 4.2%, what advantage would putting money in VGIT or BND with an expected yield of 3.5% over leaving it in cash getting 4.2% for now?
Thank you Rob. I didn’t know anything about bond investing. I may have to watch this video again to understand it even though it is beginners guide. One question I have is what would be the approach if I want to include municipal bonds in the mix?
I learned more from this 45-minute video than an entire semester of Finance. It was concise but detailed.
Rob - The way you organize your thoughts is absolutely FABULOUS. I’ve never really understood bonds so I’ve avoided them. Until now! In 45 minutes, you cleared up my confusion and I now have the confidence to consider including them in my asset allocation. I’m within 7 or 8 yrs of retirement so it’s high time. Thank you!
This is the best introduction video on bond investing I've come across in a long time. Instant subscribe! Please never stop educating the world with your knowledge and the fascinating delivery of that knowledge.
Great video!! I think there's one small issue at 3:22, when you talk about a $10K bond with 2% interest ($20). The video says, "Whatever the interest is, you're going to get that every 6 months." I interpret that to mean you'll receive $20 every 6 months, but I think you meant $20 per year split into 2 installments. Otherwise the bond would pay $40/year or a 4% coupon. Anyway, loved the video -- super informative.
2 years after the video was aired Rob Bergers strategy to invest half in traditional bonds and half in TIPS (following David Swansons approach) was very good. Despite their negative yield at the time. As he said "just in case inflation rises"...
Same with his attitude towards the hyped ARK Funds: just before their total decline he explained why he would never invest into them.
Such a talented instructor!
I have been trying to understand this for over a month now- yield, bond fund prices, interest rates, etc. An explanation that could make sense to me was not to be found in all the content I’ve consumed in the past 4-5 weeks: audiobooks, podcasts, blogs, Reddit…
I just finished watching this and I FINALLY “get” bonds/bond funds. And it’s literally only because of your video. Your explanation of why purchasing your own bonds may not be practical was the missing piece to tie it all together. I just could not understand why anyone would buy into a bond fund instead of purchasing their own at a rate they found agreeable. I felt like I was missing an important piece of the puzzle (and I definitely was!). Thanks so much for taking the time to share your explanation- it was the version that finally made it click. :)
I’m a new investor and spent probably several days of research getting a grip of the fundamentals of bonds and bond funds. Had a just watched this video I would have been set. Clear and concise. I would LOVE for you to do a future video in the same fashion explaining TIPS and TIPS funds. Still trying to get a grasp on the fundamental and utility of that investment option.
I’m a tax accountant and often work with original issue discounts and bond premiums (and their amortization) on tax returns. You explained this so well for everyone to understand. 😊. Thank you!
Thank you for explaining things so clearly for a relative newby in this arena
I buy individual bonds, and don't find it a problem to keep records. I like 'em because I know exactly what my return is. Occasionally I sell one but then I have to figure capital gain/loss, which is a pain. My bond portfolio is about 600K, half in IRA. I just want people to know it's doable (and fun to pick out bonds). During Covid, airline bonds were an amazing deal. Should sell them now, maybe I will....
Thank you Rob for explaining bonds investments in clear and simple terms. I was trying to understand for long why bond ETFs (VGLT, BND) are paying so low compared to S&P 500 (VOO) in last 5 and 10 years. And was avoiding investing in bonds due to it.
I am planning to invest in I- bonds and BND for my 20% allocation in bonds.
Hi Rob, thank you for what you do. The way you explained the concepts was easy to follow for beginners. I wish I had someone like you teaching me in school. You would be a great professor.
I've been searching for a while for an explanation of bonds with this level of depth and clarity, and I'm delighted that I kept looking! This is precisely the introduction that I needed, explaining the terminology and investing strategies in a straightforward way. Thanks so much for your work!
Wow - thanks for the thorough explanation and your taking the time to educate your viewers. Respect. I learned something very useful other than the basics - to not be too alarmed about short term changes in the interst rates/bond prices and if you're a longterm investor in BOND mutual funds/etfs you can be assured that fund will correct over time in response to the market. Crazy that you only have 20-30k subs for so much great information/education.
IF YOU DONT HAVE GRAY HAIR MAYBE CONSIDER NOT INVESTING IN BONDS AT ALL ????
Besides everything else especially appreciate your bond duration explanation and the applucable discounts. This is really very helpful. Thanks!
Very interesting. Well done. Thanks.😮
This was super helpful. Simple to understand - thanks a ton.
This was great. Exactly what I needed.
Damn, this timely video is just what the doctor ordered. Always struggled to understand bond pricing, thanks for making it simple
A large portion of my Macroeconomics class summed up in 45 minutes!
Bonds can really get your head spinnen! Nice job, I learned a lot!
Excellent video. Learned a lot.
@Rob Bergr: you worked on weekend for us. thank you so much for addressing this topic! I have learned a lot!
@Rob Berger, Does rising Interest rate affect VNQ Reits etf? thanks
Very down-to-earth and simple explanations, I appreciated it a lot thanks . I would have loved a short guide to buy individual corporate bonds though
Excellent educative video, thx!
I've been investing in bond funds for more than 30 years and I feel like I understand them for the first time! Thank you so much! You are a fantastic teacher!
Thank you. I felt like a friend was talking to me in your presentation. Thank you
This really helped me understanding the overall bond economy , thank you
That was extremely helpful. Thank you
Brilliant work. Thank you very much.
Hi Rob - thanks for this wonderful video. Super clear
Super helpful! Thanks Rob!
Fantastic! Just the subject I need to know more about. Thanks.
As somewhat of a novice, found his explanations clear and easy to follow.
Excellent job explaining bonds!
very impresive, thank you.
Thanks for the info. I have in the past stayed away from bond funds because of low yields and lack of good understanding how they work. As I enter retirement I am rebalancing my portfolio and may use bonds in place of some CD's which pay even less. Been enjoying your content.
Rob. Thanks for this video. A very clear explaination. It's an area of my portfolio that I didn't quite grasp..until now. I really enjoy your channel --you make things much easier to grasp
Awesome intro to bond structure and investing!!
many thanks great video
I have recently discovered your channel, very good content and education. Thank you
So well explained! Thanks a lot
Great stuff starting at 16:31
Wow this is so good and a lot to digest. It's late so I'm going to have to come back to this so I can absorb everything. Thank you so much for this!
Enjoy watching all your videos
Rob, thank you for making this video! I understand the relationship between interest rates and individual bond prices, but I’ve always wondered how it affected a bond ETF or mutual fund. I’ve never heard anyone else address this topic before. Your explanation makes me a bit more comfortable keeping some bonds in my portfolio going forward with the risk of rising rates. They are kind of like dividend stocks in that even if their price goes down, their yield goes up! I look at it as a win win either way with both. On a side note, I love your laid back, calm presentation style, and lack of click bait titles👍
Excellent presentation!
Thanks for taking the time to do this!
Rob, thank you very much for this information. Like others have said, you articulate the key concepts so well. Very useful 👍
This is all the information I wanted and couldn't find, thank you!
Great work, Bob. Very helpful. Thanks.
Excellent video. Thank you !
Amazing video to learn about , very informative & real life examples.
Thanks Rob, I'm taking notes .
Great video. Learned a lot
Amazing value. Lengthy yet sufficient and not overwhelming!
Thank you for the video
Great explanation, Thanks
Very helpful. Thanks
Very good video it was just what I needed to venture into bonds
After 37+ years in IT working for an inter-dealer brokerage whose clients are mostly the banks and primary dealers in US securities, your concepts are spot-on, but my goodness, your math lol. ;-)
Thank you Rob for an excellent explanation of bond and bond fund structure.
Excellent job!
thanks rob!
Thanks Rob. Really helpful. The only thing I don’t think you touched on was selling out of your bond fund. If you wait until maturity on a treasury bond, you get your principle back, weather or not rates have gone up or down. What happens in a bond fund as there is no maturity date? If in 5 or 10 years you want to sell but the fund has lost value, isn’t that a risk compared to holding a 5 year or 10 year treasury to maturity? Thanks!
Very well done Video. Thank you.
Thank you very much for the comprehensive coverage.
Great explanation for a newbie like me. Thank you so much!
Always great
Thank you so much for this. This was super helpful and very educational. I learned so much and the way you explain was very clear and easy to understand!
Excellent overview, even for a neophyte like me. One addition, I would suggest looking into BNDW, which is Vanguard's world bond fund - currently ~50/50 BND / BNDX (so 50/50 US and international bonds). Up to you, and your hedging needs.
Man this video aged well! Rob called the inflated bond prices coming down to a T.
😊Clearly explained.
Great stuff
How about managed bond funds vs bond index fund pros and cons?
I’m 100% VTI
You are a lifesaver. Thank you.
Really Well Done
Good tutorial
Thank you so much.
What is the difference between the 12 month yield (or TTM) and SEC yield? I understand the TTM is the dividend (or distribution) annualized, but where does the SEC yield come from and how is it useful?
This an excellent explanation of one of the most distasteful subjects: bonds. Most investors buy bonds to counter balance the rise and falls of stocks. But so many times they don't inversely correlate. I know bonds correlate to interest rates but still...these buggers are just frustrating. Bond price goes up and yields go down...this is so confusing for the laymen...
@Rob Berger, thank you for this great video. I just want to clarify your example on the coupon rate. Coupon rates are annualized. The example that you cited, the $1000 bond with a 2% nominal yield would be paying $10 every six months not $20 as you stated. The $20 is the annual coupon. Therefore, the holder of that bond would receive half of the annual rate for every six months such holder held on to that bond.
I think single bonds are the preferred approach as they guarantee you won’t make a loss. You might get a low return and get frustrated when you see better deals but having a ladder to cover a 2-3 year market issue would be better than a fund, your on a journey.
Especially if you’re retired
Thank you
Please do an update for 2023, when rates have gone up the way they have. Not a new video maybe, but something to add onto this one.
Maybe during that video, you could also contrast how bonds look to the investor in the period of time in this video, versus current. And maybe you could say, the best time to buy Xtype of bond would have been DATE, and this other type of bond DATE, because, but the worst time would have been DATE because.
And maybe you could talk about the new SGOV etf and compare it.
I am a new subscriber to your chanel, you are simply AMAZING sir, thanks
This is a great lecture! Given the terrible yield, what's your opinion view of {stock + cash} portfolio?
Thank you! Coupon rate is money per year not every 6 months?
Great video I’ve learned more about bonds in this video than all the other ones I’ve watched combined.👏👏👏 one question though how could you have not seen that inflation was coming?🤔 nevertheless great video.👍
This is a great video! Well done! I do have a question. When you buy a bond fund (let's say Vanguard's BND), do you make money simply from the appreciation of the NAV or do you also get money from the coupon payments? Thanks for this good info!
TIPX....TIPS 1-10 years duration...nice mix.
Thank you for this video. I still don't feel "great" about bonds. The less I have to tinker with my investments, the better.
Fantastic
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The deeper your investment roots, the stronger your financial security will be in the future.
Exactly! With my adviser, I’ve cultivated deep investment roots, strengthening my financial security for the future.
I would love an introduction to an adviser who can help me strengthen my financial roots.
My CFA NICOLE ANASTASIA PLUMLEE a renowned figure in her line of work. I recommend researching her credentials further.
Thank you for this amazing tip. I just looked the name up and wrote her.
Can you explain the tax implications of different bonds and the strategy for buying various funds for taxable vs non-taxable accounts?
I'm surprised you are not a fan of bond ladders! They are super easy to construct and maintain. Schwab actually has a tool that makes it extremely convenient and logical. I was in the Vanguard Total Bond Mutual Fund and then ETF for years and it has been a complete dog. At least with the bond ladder I can basically dampen fluctuations in interest rates.
How do you feel about 80/20 vtsax and vtblx for fat fire?
but I’d go VTI and BND
I have been loving your videos and have been watching them all of the time. I'm just starting to learn about bonds and right now am at around 99% stocks in my portfolio. With an account like Fidelity cash management SPAXX being at around 4.2%, what advantage would putting money in VGIT or BND with an expected yield of 3.5% over leaving it in cash getting 4.2% for now?
Thank you Rob. I didn’t know anything about bond investing. I may have to watch this video again to understand it even though it is beginners guide. One question I have is what would be the approach if I want to include municipal bonds in the mix?