Untitled

[seotrader]

How to Choose the Best Bonds | Bond Management Strategy

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 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. 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 in your portfolio, you mitigate risk. And this increases your returns. 

[seotrader]

Bond market strategies | The Ultimate Guide to Bonds investments

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. Bond market strategies is powerful for getting higher ROI.

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.  

[seotrader]

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. 

How to Choose the Best Bonds

1. Do Your Research

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

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 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. 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 in your portfolio, you mitigate risk. And this increases your returns. 

[seotrader]

stock market trading courses with jthetrader

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.

[seotrader]

Bond market strategies helps in investments

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.

[seotrader]

Bonds: The Safest Paradise for Your Money

Most people associate investments with high risk – a win or lose the 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. 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.  

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.

[seotrader]

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.

Consider the Time to Retirement 

Through the magic of compounding, you can grow your wealth using bonds depending on how much time you have to retirement. For instance, if you invest $200 in a bond that attracts 9% per year, after one year you will have $218. If it remains untouched, you will have $237.6 by the second year, and so on. 

Compounding will be of benefit if you are younger. This is because you have the time to allow a small amount to grow over several years. You can invest less in bonds and commit more of your capital to riskier but high-yielding assets like stocks. 

As you approach retirement, you will want to commit more to the safety of bonds, and based on the rate of return, you will get a consistent income.  

Here is a guide:

In your thirties, commit 10% to 20%

In your forties, commit 20% to 30%

In your fifties, commit 30% to 40%

In your sixties, commit 40% to 50%

Sixties and above (post-retirement), 60% to 70%

Check Your Investment Goals

Although investment is a long-term strategy and you cannot expect major results in weeks or months, every investor has different goals. Some are more aggressive, aiming to make high returns at the cost of taking a higher risk. Others are more interested in preserving capital.

If you fall under the most aggressive type and hope to make a high long-term return of 8% or more from your portfolio, allocate about 20% to bonds and the rest to investment assets like stocks. There are times when the value of your portfolio will drop, but it will then recover over the long-term. 

When looking for a moderate long term return of about 7%, you can allocate about 40% to bonds and 60% to stocks and other high-yielding investment assets. This portfolio will also have periods where the value will drop and others where it recovers.   

If your aim is to preserve capital, more than 50% should go to bonds. 

Consider Day Bond Trading

With this one, you don’t have to wait for ages before you earn an income. You can be trading daily and earn even in minutes. 

You just need the right knowledge to get started. Let me show you how. Join my Bond Market Mastery Course.

Conclusion

These numbers are only a guide. You should consider your goals, risk appetite, and age when investing in bonds. As you approach retirement, your portfolio should lean on the safer side with bonds. 

Continue doing your research on the companies and institutions you invest in to know when to rebalance and make changes to the portfolio so that it does not exceed the level of risk you can take. 

[seotrader]

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 management. 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.

A bond trading strategy 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. 

[seotrader]

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 management. 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.

A bond trading strategy 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. 

[seotrader]

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 strategy 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 management 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 management, 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.

[seotrader]

Bond Management Strategy | Bond Market Strategy

What are the Bonds?

The US 30-year Treasuries aka “The Bonds” is the financial markets best kept secret. With over $700 Billion traded daily the bonds are the prime place to start or continue your trading career. Somebody (or company) loans the US money. The US promises to pay them back with interest. Now that agreement creates a market for the rest of us. We can now look at the value of that agreement and trade its value each day in real time.

Who is This For?

All People

Just starting out? Never traded before? Thats great. My method of teaching starts you at square one and allows you to cut through the jargon and babble and get right to making money.

Traders

Maybe you trade options, or FX or the even the indexes. You just need to take things to the next level, at $31.25 the bonds provide the liquidity and tick value that will take you P&L’s to the next level.

Need Startup Capital

Thats perfect. I literally tech my students how to trade Other Peoples Money. Aka OPM. You don’t need startup capitol when you learn from me. You just need the education. I’ll help you get the money you need to start.

J the Trader is the best trading teacher in the world. Period!!

Trade anywhere, Anytime

I teach concepts that work no matter the day or time. The bond market is a 23/5 market, so it doesn’t matter what your lifestyle…you can be profitable!

Profit on Demand

How much money do you want to make a day? Now you can make that much without any stress or fuss. I teach my students to profit when and how they like. You can find the money in the market.

A community Approach

In our live trade room you can see when and how to enter and exit trades. We also have lively dialogue between all the members of the room. You don’t have to trade alone. Come profit with US.

Trade You Capitol or OPM

We have student from all walks of life. Maybe you can fund your own account. Thats great. Maybe you need to get funded. We’ll show you hot to do that too!

[seotrader]

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 income 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 bond investment strategy. 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 risk-free 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. 

[seotrader]

4 Best Bond Investing Strategies for Beginner’s

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. 

1. Passive Bond Management Strategy

This is a buy-and-hold investment strategy that maximizes the income-generating potential of a particular bond. 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 reinvestments made of the cash flow. The best bonds to use with this strategy are government bonds, investment-grade corporate bonds or municipal bonds. 

2. Active Bond Strategy

With the active bond market 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.    

3. 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. 

4. 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 strategy , 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.  

[seotrader]

Learn To Earn: 5 Bond Trading Tips and Tricks to Keep in Mind

You probably already know that bonds are less volatile than most investment assets in the market. But this does not mean you can invest blindly. There are potential risks that come with investing in debt instruments, but we will show you how to work through them.  

Bonds can be classified as speculative or investment-grade bonds. A speculative-grade bond is viewed as not being of investment quality by a credit rating agency. This is because the agency rates the issuer poorly, and considers it to have a high risk of default. Due to the high risks involved, speculative-grade bonds carry a high interest rate. 

Investment-grade bonuses, on the other hand, are highly rated by credit rating agencies. They carry a lower risk of default and lower interest rates. 

Here are five tips to consider before investing in bonds. 

1. Define Your Objectives

What are your goals for investing in the bond? Do you want to grow your capital or maintain the principal value? When will you withdraw the money? Defining your objectives will help you choose the level of risk you are willing to take and pick the right online trading investment strategy.  

2. Do Not Focus Only On Yields When Investing

When you feel that the coupon payments are not as high as you would prefer, do not carelessly run for the higher yields offered by issuers with low credit quality. The high yields come with a higher risk and less security. Even when you are willing to take the risk, check the company’s financials and its past performance to assess if it can service its obligations.

3. Pay Attention to Possible Changes in the Interest Rate 

Bond prices have a negative correlation with interest rates. During the period prior to the bond’s maturity, interest rates fluctuate, making the bond prices also widely vary. This is not the best time to sell the bond. The interest rate could change abruptly, causing you losses. It is better to hold your position.   

4. Check the Claim Status

Although bond investors get the first claim to company assets if it goes bankrupt, not all bonds are equal. If you are investing in a speculative-grade bond, check that the bond will be given priority in case the issuer undergoes liquidation. Senior notes, for instance, are more secure than other bonds. They are repaid first before most other debts and are often backed by collateral.  

5. Do Not Ignore the Issuer’s Reputation

The market perception about the issuer and issue can affect bond prices. If other investors think the bond will not perform well, the issuer will not meet its obligation, or if the issuer has a bad reputation, the value of the bond will decrease. Carry out background research first about the company before investing.  

Conclusion

A bond market strategy may be conservative and less risky, but this does not mean you should be care-free when making your investment. First, define your goals and know your risk profile. You should also check that the company is capable of paying back its obligations. And finally, observe the interest rate moves before changing your position. 

[seotrader]

OVERNIGHT SUCCESS IN THE BOND MARKET

This powerful PDF breaks down major Bond market secrets in order to get you ready to trade. You'll get familiar with the major market concepts that drive price up and down each day. Are you ready?

[seotrader]

Bond Trading: Why Bonds are The Future of Investment

If you think of bonds as an old fashioned way to invest your money, you couldn’t be any more wrong. With the unpredictable economic cycles experienced today, bonds provide a safety net. They are reliable, predictable, and an important component of a well-balanced investment portfolio. 

Here are four reasons why the bond market makes an excellent choice of investment for both individuals and institutions. 

1. More Predictable Returns

While investment assets like stocks may carry higher returns especially in the long run, the returns are not predictable, especially in a recession. A bond is dependable and predictable, despite the current economic state. 

The scheduled repayments make it suitable for investors who want money they can live off of, and it’s also easy to match future liabilities with the cash flow obtained. One of the best things about bonds is that they preserve the principal and when held to maturity, they terminate at par.

2. Great for Saving

Bond market strategies are an excellent way to save for the future. If you do not need the money in the short term, you will get a better return investing in bonds than you would get from keeping the money in a savings account or certificate of deposit. This is because bonds have a higher interest rate than banks. 

The best part is that the higher returns do not come with too much risk especially if you invest in investment-grade bonds. And if you re-invest the cash-flows, you will grow your money exponentially. 

3. Provides Diversification

The phrase ‘you should not put all your eggs in one basket’ is rich wisdom when it comes to investments. Great diversification in a portfolio provides better risk-adjusted returns to an investor.   

Bonds make an excellent diversification tool for any investor’s portfolio. They have a low correlation to other asset classes like stocks, and this makes them excellent at shielding investors from the volatility of the market. This reduces risk and maximizes returns.  

4. They Carry Tax Advantages

Tax reduces the income earned from investment. It is mandatory for most investment assets such as money market funds and equities, except in cases where the money is held in a tax-deferred account.  

If you are seeking to reduce your tax burden, there are some bonds that can come in handy. Municipal bonds are tax-free at the federal level. And if you have a municipal bond issued by the state you reside, the bond is tax-free at the state level. Income from the U.S. treasuries is also tax-free at the state and local levels. 

Conclusion

Whether you are looking to save some money for the long-run or are looking for a reliable way to generate cash flows or meet future obligations, bonds can serve the purpose. They carry less risk than other types of investments, and the best part is that you could reduce your tax obligation and get your capital investment back at par.  

Bonds market strategies will always provide a great way to diversify your portfolio. When the stock market is falling, like it happened in the 2001-2002 crash and the 2008-2009 financial crisis, having bonds in your portfolio will ensure you get better risk-adjusted returns. 

[seotrader]

Walk With The Market: Learn Bond Trading Now

If bonds are not part of your investment portfolio, you are missing out on the immense benefits they carry. Bonds provide diversification and a predictable stream of cash flow. They also carry tax benefits and are a great tool for saving for the long term.

A bond is a unit of debt issued by a company or government. It pays an annual fixed interest rate or coupon rate, which depends on the credit rating of the issuer and the time to maturity. But some entities are offering variable or floating interest rates as well.

Bond prices have an inverse correlation with interest rates. When interest rates increase, prices decrease.

There are five main types of bonds that you can invest in

Government bonds

Corporate bonds

Municipal bond (Muni bonds or Munis)

Emerging Market bonds

Inflation-linked bonds  

Bond trading is not rocket science. First, you need to learn the language used in bonds. It will make you more confident and objective when making investment decisions.

Here are the terms commonly used in bond trading.

Issue price – Original price at which the bond issuer sells the bond

Face value - The amount the bond will be worth upon maturity.

Maturity date – Date when the bond will mature and the bond issuer will pay the face value of the bond.

Coupon Payment – The annual interest paid on the bond calculated on the face value. It is paid from the date of issue to the date of maturity.

Coupon date – Date when the coupon payment is made

Credit rating – This is a quality score given to bonds depending on the level of risk involved. The highest rating is AAA, while the lowest is C or D. Highly rated bonds are known as investment-grade while lower rated bonds are known as speculative-grade.

How to Buy Bonds

You can buy bonds through a brokerage, a mutual fund or exchange-traded fund, or through the government treasury department.

Before choosing the bond to buy, assess the level of risk you are willing to take. Low-rated bonds come with attractive yields but carry a high risk.

Know for how long you will be holding the bond and your goal. This will help you pick a bond that works best for you.

You should carry out background research on the company issuing a bond. Check their history with repayments, financial health, and market reputation. These factors will determine how the bond performs and the chances of getting your money back.

How to Manage your Bond Investments

You can choose to manage your bond investments actively. This is where you continuously make changes to your portfolio to maximize your total returns. It is risky but comes with countless possibilities for increased income.  

There is also the buy-and-hold method. With this passive method, you hold your position until maturity. You can use the coupon payments to meet your obligations or reinvest them in the portfolio.

You can also rely on a bond index to increase the profitability of your portfolio without taking too much risk.      

Conclusion

Bonds can make a profitable addition to your investment. They are less volatile than most investment assets, providing a predictable income stream. And you get your entire investment back upon maturity.

Choose the type of bond and investment strategy that works best for you, depending on your risk tolerance and objectives.