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[jerrybenusa]

How Much Should I Invest in Bond Trading?

A fact about bonds is that although they carry very low levels of risk, their rate of return is low compared to other more volatile investment assets, such as stocks.

This means allocating your entire portfolio to bonds will lead to a very low rate of return. It is best to diversify your portfolio and include a variety of assets.  

So how much exactly should you allocate to bonds?

There is no one-size-fits-all approach. A number of factors will influence the amount of money to invest in bonds:

Your age

Your experience as an investor

Your risk appetite

Your investment philosophy

Here is a guideline to help with your decision.

[jerrybenusa]

4 Best Bond Investing Strategies for Beginners

As a beginner, it’s easy to wrongly assume that bond investments involve simply finding the highest yielding bond. But it demands more. You have to assess the different types of bonds available and find one that meets your unique needs and whose risks you can handle. Next, find the best strategies to maximize your returns.

Here are the top four bond investing strategies beginners can use.

 Passive Bond Management Strategy

This is a buy-and-hold investment strategy that maximizes the potential return on investment. It involves holding it to maturity. You can reinvest the cash flow from the bond into the portfolio.

The passive bond management strategy involves very minimal risk and keeps transaction costs at a minimum. The only difference that can exist between the total return and the actual coupon yield is the reinvestment’s made of the cash flow. The best bonds to use with this strategy are government bonds, investment-grade corporate bonds or municipal bonds.

 Active Bond Strategy

With the active bond strategy, it seeks to maximize the total return from the bond. It involves making bets on the future and taking risks, and continuously making changes to the portfolio.

The active strategy involves things like bond swaps. Bond swaps involve liquidating one bond to purchase another, with an aim of making higher returns from anticipated changes in interest rates, yield curve shifts, credit ratings of issuers, or any other shifts in the bond market.

Indexing Bond Management Strategy

This strategy partly resembles the passive buy-and-hold method, but with some flexibility. You can make changes to the portfolio to mimic the targeted bond index in terms of risk and returns.

The indexing bond management strategy works well with large portfolios so that it can match the size of the index. Some transaction costs will be involved when making the occasional changes in the portfolio to resemble the index.

 Immunization Bond Strategy

This strategy seeks to protect the bond from the fluctuations in interest rates that cause a change in bond prices. It involves changing the portfolio duration to match your investment time horizon and keeping the interest rate fixed, regardless of the bond market conditions.

The assurance of getting the desired return at the end of the investment period minimizes risks. This strategy sounds similar to the passive buy-and-hold strategy. However, with the purest forms of the immunization strategy, such as investing in a zero-coupon bond, there is nil variability in returns from reinvesting cash flows.

Winding up

Finding the best bond is the easiest part of bond investment, the real task is in picking the right investing strategy based on your goals and risk tolerance.

While all these four strategies are effective, some carry more risk but also come with the possibility of making a higher return, such as the active bond strategy. The immunization and passive bond management strategies are safer but come with the opportunity cost of giving up the possibility of making more returns.

With the indexing bond management strategy, you get a little of both active and passive management styles.

[jerrybenusa]

Top 5 Bond Trading Methodologies

Including bonds in your portfolio is one of the best ways to add diversification and reduce the risks involved with volatile assets like stocks. Bonds provide a predictable rate of return and carry a higher return than saving in banks and certificates of deposits. And if held to maturity, you get back the principal.  

There are different methods of investing in bonds. Your choice will depend on your risk tolerance. Like most investments, the more risk involved, the higher the return. Here are the top five.

1. Investing in Government Bonds

These are the safest forms of bonds. They are issued by the national government of a country to fund its operations. Government bonds are denominated in the country’s currency. When the bond is issued in a foreign currency, it is known as a sovereign bond.

Government bonds are the most stable type of bonds because they are guaranteed by the national government, which can easily raise taxes or print money to redeem the bond. But this low risk also means that they come with the lowest return.

2. Working with Corporate Bonds

Corporate bonds are issued by private and public corporations. Their purpose is to raise money for business operations, such as exploiting new business ventures. They are generally riskier than government bonds but pay higher rates.

Corporate bonds can be classified as investment-grade or speculative-grade. Speculative-grade bonds have a relatively lower credit rating than investment-grade bonds. They carry a higher risk of default, which makes them higher-yielding.

3. Investing in Municipal Bonds (“Muni Bonds” or “Munis”)

These are bonds issued by government entities like states, municipalities, or counties to fund public work, such as parks and libraries. They are tax-free at the federal level, which makes them attractive.  

Municipal bonds can be classified as:

Conduit bonds

General obligation bonds

Revenue bonds

General obligation bonds are not secured by revenue generated from a project. They can be payable from general funds or dedicated property taxes. Revenue bonds are secured by revenue from a specific project or another source. Conduit bonds are issued on behalf of private bodies such as hospitals. The borrowing entity is responsible for making repayments to the investors.  

4. Investing in Emerging Market Bonds

These are bonds that are issued by governments and companies in developing countries. Due to the high risk involved, they carry very attractive yields.

Emerging market bonds come with special risks, such as currency fluctuation as well as economic and political risks. Latin America and Asia are examples of developing economies.  

5. Investing in Inflation-linked Bonds

These are government bonds whose principal is adjusted regularly based on changes in the inflation rate. This then provides an inflation—adjusted or real return.

These bonds provide protection against short-term inflation. They lose more value when the real interest rates rise.

Winding Up

It’s easy to ignore the many advantages that bonds carry. They may not come with the excitement of unpredictability that other assets have, but the diversification they add to your portfolio cannot be ignored.

If you are more risk-tolerant, you can invest in speculative-grade corporate bonds or emerging market bonds. If you are a more risk-averse investor, try government bonds, investment-grade corporate bonds, and municipal bonds.

[jerrybenusa]

How the Bond Market Is the Backbone of the Economy

The pandemic season has been terrible. Worldwide economies have gone down tremendously. People are trying to use numerous ways to jumpstart the economy. One thing that has remained consistent during this time is trading bonds. Successful day bond traders are still making money every single day.

Here’s how the bond market is the backbone of the economy.

Bonds finance the government

This goes to the very definition of bonds. By going into the bond market, you’re directly financing the government, helping it finance projects and day to day operations. You do benefit from the lucrative interest rates. However, you’re also ensuring that the public gets access to good infrastructure, libraries, parks, etc.

Bond markets affect the stock market

How is the bond market linked to the stock market? Simple. It’s a direct competitor. As an investor, you must decide whether you’ll put your money in bonds or stocks. Bonds are way safer. Therefore, when there’s uncertainty, the masses will tend to invest more in bonds than stocks.

Bonds remain a strong economic backbone. They keep earning you money, whether the stock market is doing well or not. They keep the economy going, even when stocks are tanking.

Bonds have an impact on mortgage interest rates

Yes, bonds impact mortgage interest rates. There are different types of bonds that investors can choose from. As an investor, you go where you make the most money. You constantly check to see the risk vs. reward ratio on various interest rates.

Therefore, if there are low-interest rates on bonds, there are also low-interest rates on mortgages. This helps more people to own expensive homes.

Compared to bonds, mortgages are way riskier. They take the longest duration to give returns. The period can be 15 years or even 30+ years.

With day bond trading, you don’t have to wait for ages to get returns. You can be making money this way every single day. And eventually, you can combine both bond trading and real estate.

The bond market can help predict the economy

Bonds are powerful and have a robust effect on the economy. Such a huge effect means you can use bonds to forecast how the economy will look like in the future. Bond yields show you the direction investors believe the economy will take.

Yields on long-term notes are usually higher, for example. That shows investors want more ROI since they’re tying up their money for longer periods. The yield curve thus slopes up when you look at it from left to right.

When there’s an inverted yield curve, it shows the economy is almost going into recession. This is when short-duration yields on Treasury bills, like one month to one-year notes, go higher than yields on longer-term ones such as 10-30-year bonds.

This shows you one thing: Short-term investors want higher interest rates and more ROI than their long-term counterparts. Why? They believe that a recession is going to happen soon.

Therefore, you can tell so much about the economy by just checking out the bond market. It’s the backbone of the economy with tentacles that stretch wide on the economic divide.

You can benefit from this huge market

The best news is that you can start bond trading even as a complete beginner with zero experience. You just need the right knowledge. Check out our

Bond Market Mastery Course and start profiting from this amazing market.

[jerrybenusa]

Bonds Trading! Predictable Source of Income…

You’re not sure what tomorrow holds. Crazy events are just too many. The pandemic has paralyzed so many things already. Besides that, you’ve seen protests, weird things that come with the elections…name it.

Right now, you know that to survive long-term, you need a predictable source of income fast. The great news is you can get started right away with bond trading, one of the safest ways to make money right now.

And no, you don’t have to wait forever. You can get into the day bond trading market and keep earning daily from this lucrative venture.

Why should you consider bonds as a predictable source of income for you?

Bonds are less risky

When you talk about markets, many people quickly think of the stock market. Others think of the forex markets. All these are huge markets but incredibly risky and volatile. In fact, there’s solid proof that most who get into the forex market fail. It mostly ends in premium tears.

Enters the bond market. This is the backbone of the economy and one of the safest ways to trade out there.

Why?

Government entities rarely default. In the United States, government bonds are considered risk free. So, even though the pandemic has ruined most things, the bond market still stands. And you can still make a lot of money from it.

You can diversify

Okay, there’s no risk, great! But should you put all your eggs in one basket? No. You don’t have to. Bond investing can be diversified.

There are several types of bonds. These have different maturity terms. You can use this to minimize volatility and to ensure that your cash-flow is steady.

I recommend day bond trading if you want to have a consistent and dependable source of income. I can actually teach you how to do this on my Bond Market Mastery course.

On the other hand, you can also diversify and take up longer-term bonds for future ROI.

Low profile but extremely important

Do you love keeping a low profile? You’re tired of all the ads. You don’t want to keep promoting things on social media, blogs, calls, emails, or door to door to make a sale. In fact, you’re just looking for a way to quietly make money while you focus on other things that are important to you, like spending more time with your family.

If this describes you, then the bond market is an excellent and predictable income source for you. Once you learn how to do it well, it can give you that freedom that you’ve really been looking for.

Bond trading is lower profile but more important than even stock trading. You simply alter your portfolio considering the prevailing market conditions to maximize profit. Bonds are especially important since they affect the prevailing interest rates in an economy. In turn, this affects all sorts of lending and credit industries.

Better than savings accounts

Saving is crucial. Don’t spend all that you earn. However, pointless saving is useless. You’ll simply keep money in a bank waiting for a “rainy day”. And when that day comes, you use up all the money and remain broke.

The best thing to do is to grow your money. Consider doing this by putting money on the bond market instead. And to even start day bond trading to give you additional income. We’ve already figured out that it carries little to no risk.

What’s the best news about day bond trading?

You can make money from it daily. In fact, with the right strategy, you can be making considerable amounts of cash in minutes.

Bonds reduce your tax burden

You don’t want to lose most of your money to tax. Yes, pay your taxes. However, if you find a way to reduce the burden, take it. That’s what rich people do.

If you want to pay less in taxes, there are bonds that you can try out. As said, you should diversify your bond trading strategy. Day trading will pay your bills. Long-term trading will take care of your future. And tax-free bonds, such as municipal bonds at the federal or state level, will ease your tax burden.

Stop being uncertain about your financial future

Bond trading can change the game for you. It’s safe. It’s predictable. It’s lucrative. Ease the burden for yourself and your family by jumping into this profitable bandwagon.

[jerrybenusa]

How the Bond Market Is the Backbone of the Economy

Yields on long-term notes are usually higher, for example. That shows investors want more ROI since they’re tying up their money for longer periods. The yield curve thus slopes up when you look at it from left to right.When there’s an inverted yield curve, it shows the economy is almost going into recession. This is when short-duration yields on Treasury bills, like one month to one-year notes, go higher than yields on longer-term ones such as 10-30-year bonds.This shows you one thing: Short-term investors want higher interest rates and more ROI than their long-term counterparts. Why? They believe that a recession is going to happen soon.Therefore, you can tell so much about the economy by just checking out the bond market. It’s the backbone of the economy with tentacles that stretch wide on the economic divide. You can benefit from this huge marketThe best news is that you can start bond trading even as a complete beginner with zero experience. You just need the right knowledge. Check out our Bond Market Mastery Course and start profiting from this amazing market.Yields on long-term notes are usually higher, for example. That shows investors want more ROI since they’re tying up their money for longer periods. The yield curve thus slopes up when you look at it from left to right.When there’s an inverted yield curve, it shows the economy is almost going into recession. This is when short-duration yields on Treasury bills, like one month to one-year notes, go higher than yields on longer-term ones such as 10-30-year bonds.This shows you one thing: Short-term investors want higher interest rates and more ROI than their long-term counterparts. Why? They believe that a recession is going to happen soon.Therefore, you can tell so much about the economy by just checking out the bond market. It’s the backbone of the economy with tentacles that stretch wide on the economic divide. You can benefit from this huge marketThe best news is that you can start bond trading even as a complete beginner with zero experience. You just need the right knowledge. Check out our Bond Market Mastery Course and start profiting from this amazing market.The pandemic season has been terrible. Worldwide economies have gone down tremendously. People are trying to use numerous ways to jumpstart the economy. One thing that has remained consistent during this time is trading bonds. Successful day bond traders are still making money every single day.

Here’s how the bond market is the backbone of the economy.

Bonds finance the government

This goes to the very definition of bonds. By going into the bond market, you’re directly financing the government, helping it finance projects and day to day operations. You do benefit from the lucrative interest rates. However, you’re also ensuring that the public gets access to good infrastructure, libraries, parks, etc.

Bond markets affect the stock market

How is the bond market linked to the stock market? Simple. It’s a direct competitor. As an investor, you must decide whether you’ll put your money in bonds or stocks. Bonds are way safer. Therefore, when there’s uncertainty, the masses will tend to invest more in bonds than stocks.

Bonds remain a strong economic backbone. They keep earning you money, whether the stock market is doing well or not. They keep the economy going, even when stocks are tanking.

Bonds have an impact on mortgage interest rates

Yes, bonds impact mortgage interest rates. There are different types of bonds that investors can choose from. As an investor, you go where you make the most money. You constantly check to see the risk vs. reward ratio on various interest rates.

Therefore, if there are low-interest rates on bonds, there are also low-interest rates on mortgages. This helps more people to own expensive homes.

Compared to bonds, mortgages are way riskier. They take the longest duration to give returns. The period can be 15 years or even 30+ years.

With day bond trading, you don’t have to wait for ages to get returns. You can be making money this way every single day. And eventually, you can combine both bond trading and real estate.

The bond market can help predict the economy

Bonds are powerful and have a robust effect on the economy. Such a huge effect means you can use bonds to forecast how the economy will look like in the future. Bond yields show you the direction investors believe the economy will take.

[jerrybenusa]

Bonds: The Safest Paradise for Your Money

Most people associate investments with high risk — a win or lose game. But it is possible to invest while preserving your capital and stil...

You Make an Income With bonds, you make an income through interest payments, known as coupons. The payments are typically made every six months, creating a predictable income. This cash flow makes it an excellent investment choice for retirement. You can also resell the bond at a higher price than you bought it and make a profit but if your aware with bond management strategy

[jerrybenusa]

Bonds: The Safest Paradise for Your Money

Most people associate investments with high risk — a win or lose game. But it is possible to invest while preserving your capital and still make returns. The solution is investing in bonds. A bond is a financial instrument that the government, companies, and other institutions use to obtain cash from investors in exchange for interest, which can be paid periodically. The bond comes with a defined period. After its maturity, the investor receives the original sum back.

Advantages of Bonds

Bonds come with a number of benefits that make them safe, especially for new investors or those unwilling to take a high level of risk.

1. You Make an Income With bonds, you make an income through interest payments, known as coupons. The payments are typically made every six months, creating a predictable income. This cash flow makes it an excellent investment choice for retirement. You can also resell the bond at a higher price than you bought it and make a profit but if your aware with bond management strategy

2. Capital Preservation If you are looking to invest without losing your capital, go for bonds. At the end of the given period, you will get the initial amount invested. The only possibility of losing is if the entity defaults. You can avoid this by carrying out background research on the company’s financial health first before investing your money and choosing investment-grade bonds.

3. They Offer Diversification Bonds have a negative correlation to other asset classes. It makes them great for diversifying a portfolio. Diversification of a portfolio leads to better risk-adjusted returns for investors. Bonds are less volatile than other forms of assets and will protect your returns when the stock market is falling.

4. They Come with Tax Benefits When seeking to reduce your tax burden, some bonds can provide this advantage. There is no tax charged on the interest paid on municipal bonds at the federal level. It is also zero on the state level for municipal bonds issued in the state you reside in. Interest from U.S. treasuries is also tax-free at the state and local levels.

Can you Day Trade in Bonds? Day trading involves opening and closing several trade positions during the day and ensuring they are all closed at the end of the day. The aim is to capitalize on the small price movements of the highly liquid investment assets.

If you are a day trader, you can conveniently trade bonds using Bond ETFs (Exchange-traded Fund). Bond ETFs are highly liquid and trade as an equity product. Bond ETFs exclusively carry various bonds, such as U.S Treasuries and corporate bonds, both long-term and short-term.

Conclusion

If you are risk-averse or just starting as an investor, bonds provide the safest option. They come with a predictable income, and you get your initial investment back at maturity. Bonds also provide diversification to the portfolio, protecting you from the bumps other asset classes present. As a plus, you get to reduce your tax burden if you invest in municipal bonds and U.S. treasuries. Feel free to contact us and visit our website for further information! https://iamjthetrader.com/

[jerrybenusa]

3 WAYS TO PRESERVE CAPITAL WHILE INVESTING

Never lose money.” These words by Warren Buffet are arguably one of the best pieces of advice an investor could follow.

Although investing is a risky affair, it pays to be sensible and careful. You should not approach investment with the attitude that you can win or lose. A smart investor will secure their capital first and then work on making a profit. This is a conservative investment strategy known as capital preservation.

Here are three ways to preserve capital and prevent loss in your portfolio.

Diversify Your Portfolio With Bonds

One of the easiest tricks to protect your capital is to diversify your portfolio. Invest in more than one asset class, and you will reduce unsystematic risk. Unsystematic risk, also known as specific risk, is the risk associated with a specific industry or security.

Bonds are an excellent way to diversify your portfolio. They have a low correlation to other asset classes, which provides an excellent way to reduce its volatility.

Bonds are also fixed-income instruments with a maturity date. The principal is paid back in full plus the interest earned. This keeps your capital protected. Government bonds, treasuries, and investment investment-grade corporate bonds come with the lowest risk.

2. Make Use of Stop Loss Orders

Share prices are always changing, and it is unreasonable to expect that you will exit all trades with a profit. But you can use a stop loss to control how much you lose without having to monitor your portfolio constantly.

A stop loss is an order placed with a broker to protect your capital against falling share prices. It refers to a preset amount of risk that you are willing to take, reducing your exposure during a trade. When the prices get to the predetermined amount, the broker automatically sells the stock.

You get the assurance that you cannot lose beyond the amount you are comfortable with. For instance, if you purchase the stock at $10 and set a stop loss order of 10% below the buying price, your shares will be automatically sold at the current market price if the share prices fall below $9.

3. Find Stocks That Pay Dividends

Any successful investor will tell you that investing in the best stocks requires extensive research about the company and understanding its history. You can only get good returns from your stocks if you invest in stable companies paying dividends. Go for Dividend Aristocrats. These are companies that have increased their dividends consecutively for over 25 years.

As long as a company is paying dividends, it is likely to grow fast and result in an increase in the share prices and high capital gains. The dividends will also represent a large portion of total returns, and you will generate the capital gains faster.

Dividend-paying stocks will increase the overall return of your portfolio. The dividends will also cushion you from falling stock prices.

Conclusion

Whether you are risk-averse or risk-tolerant, you should always invest while keeping the loss in value of your capital at zero or minimum. You can achieve this with a diverse portfolio that includes high-quality bonds and dividend-paying stocks. Make use of techniques that can prevent losses, such as stop loss orders. Visit our website for further information.

[jerrybenusa]

The Ultimate Guide to Financial Freedom

The phrase “do not put all your eggs in one basket” could not be any truer for investments. A profitable investment portfolio is diversified.  While asset classes like stocks provide a high rate of return, they are highly volatile and subject to price changes due to economic cycles. Bonds, on the other hand, may have a lower rate of return, but they are less volatile, safe, and carry predictable income.  Most people understand how to choose the best stocks, such as looking at the trends in earnings growth and the price-earnings ratio. But few people know how to pick the best bonds and bond management strategies.

How to Choose the Best Bonds As much as bonds are low risk and less volatile, you could lose your money if you invest with an issuer who eventually defaults.

1. Do Your Research A bond is like a loan that you offer to a company or government institution. If the entity you are loaning cash to is not financially stable, they could fail to pay. And this means losing your initial investment. Do your homework by checking the creditworthiness of the company.  Avoid junk bonds. They may have an attractive interest rate, but their risk of default is also high. The best bonds are those branded ‘investment grade’. They have a lower risk of default.

2. Do the Math Most people overlook the cost of the investment. If there are fees or commissions you will pay a broker or financial manager and taxes, will they exceed your returns? Will you make as much as you had hoped for? Check that the quality of the bond can help you sell at a profit.You have prior knowledge regarding the bond investment strategy and bond prices in the secondary market fluctuate in price depending on factors like interest rates, credit quality, and economic conditions. If the price rises above the face value, it is selling at a premium and you can make a profit.

3. Check the Interest Rate Bonds can either carry a fixed or floating interest rate or one that is payable at maturity, also known as zero-coupon bonds. Your choice will depend on your cash flow needs With fixed-rate bonds, the interest rate is established during the issuing of the bond, and interest payments are paid periodically. With floating rate bonds, the rate changes in line with a short-term benchmark rate like LIBOR (London Interbank Offered Rate). Zero-coupon bonds will only pay the interest at maturity of the bond.

4. Individual Bonds vs Bond ETFs Bond ETFs (exchange-traded fund) contain bonds of various forms, such as government and corporate bonds. Unlike individual bonds, they do not have a fixed maturity rate. Instead, their maturity is the weighted average of the maturities of the bonds in the portfolio.  Unlike individual bonds, bond ETFs pay their coupons more regularly, making them suitable for investors in need of cash flow. This is because they hold different issues at once with different coupon payment dates. Bond ETFs are also the best choice for day traders. They resemble equities and day traders can trade them on an exchange like stocks. They are also highly liquid.

Conclusion Investment is one of the best ways to achieve financial freedom, but only if you are wise about it. Diversify your portfolio with high-quality bonds that meet your investment and cash flow needs. When you have different asset classes of different in your portfolio, you mitigate risk. And this increases your returns.