Bonds at a discount or premium
Pop quiz, which of these bonds would you rather invest? Bond A: 3-year bond with a 3.00% coupon at price $94.50 Bond B: 3-year bond with a 10.00% coupon at price $113.77 I had an interesting conversation with a client who only wanted to purchase bonds under par ($100) and I wanted to demonstrate that […]
The inner workings of a bond
Its quite endemic that bonds aren’t more well-known in Australia. A lot of that is intentional from the wholesale market. Trying to confuse the retail investors with lots of numbers, formulas and jargon.This article will go through some of the terminology of bonds and clear things up a bit. Face Value / Amount The notional […]
What you need to know about Corporate Bonds
This article is designed to give you the information you need to make an informed decision about whether or not Corporate Bonds are right for you. Everyone is looking for a safe way to get a reasonable return on their investment, but finding the right one that fits your needs can be challenging and entails […]
What is the difference between a Term Deposit and a Bond?
Term deposits and bonds fall under the category of fixed income. They are relatively risk-free investments that you can use to strengthen your portfolio, like all investment options, they both come with their fair share of pros and cons.
ETF and other exchange traded bonds
An ETF is an investment into a fund that trades some asset. This is often a combination of shares of stock, futures, foreign currency etc. These ETFs are usually built to track an asset or index such as the ASX200 Australian share index. They allow you to invest in an asset (the ETF) that will […]
How the market impacts bonds
The basic principal with interest rates is simple. When economic growth is strong and inflation is rising, the Reserve Bank of Australia will increase interest rates in an attempt to slow the growth and ease inflation. As interest rates rise, new bonds are issued with higher coupon rates. This means that the new bonds return […]
Bond Funds
Bond Funds, like Stock Funds offer professional selection and management of a portfolio of Bonds for a fee. Through a Bond Fund you can diversify the risks across a range of bonds pre-chosen by the manager. Some funds are designed to follow a market, often called an Index Fund. Other Funds are actively managed according […]
How much is a bond worth?
Most Bonds have a face or par value, which is what the bond will pay back at the end of the term (maturity date). The face value can be different for different Bonds, anywhere from $1 to $1,000,000, traditionally however, they are quoted as if the Bond is worth $100, even if the single bond […]
Secured Bonds versus Unsecured Bonds
We continue our beginners series discussing the different types of bonds available. Bonds can be split into two main categories, Secured and Unsecured Bonds, each with different risk factors. With a Secured Bond, the company issuing the bond is willing or forced by the lender to offer something with a market value as collateral making […]
Bond Credit Rating
To ascertain a particular risk profile of a bond it can be marked with a credit rating from various credit rating agencies. There is a range of credit ratings available for bonds and credit agencies like Standard and Poor’s and Moody’s score a bond from AAA (the best quality) through to D. This is an […]