The bond ladder strategy can be valuable as you approach retirement. It can help you navigate the challenges of investing in bonds, particularly the risk of rising interest rates. You've diligently saved and invested, and most of your portfolio
Fixed-Income Investing
Bond Funds: Why Invest, Types, Benefits, and Factors to Consider
Bond funds offer a compelling investment option for many individuals. This guide will provide a comprehensive overview of bond funds, including their types, benefits, and key investment considerations.By the end of this reading, you will better
Convexity: Why It Matters, How It Works, Impacts, How to Leverage It to Optimize Your Portfolio
Convexity measures the curvature of the relationship between a bond's price and its yield. While duration tells you how much a bond's price will change for a given parallel shift in interest rates, it assumes this relationship is linear.Convexity
Duration: How It Works, Factors Affecting It, and Managing Duration Risk
Duration is more than just the length of time until a bond matures. It's a key measure quantifying a bond's sensitivity to interest rate fluctuations.Essentially, duration tells you how much a bond's price is likely to change when interest rates
Credit Spread: Why It Matters, Factors Affecting It, How to Profit From It
Credit spreads, the difference in interest rates between corporate and government bonds, offer significant risk and potential reward for fixed-income investors. By understanding how credit spreads reflect issuer risk, respond to market forces, and
Discount Rate: What It Is, Factor Affecting It, and How it Impacts Your Portfolio
The discount rate is a fundamental concept when evaluating bonds. Imagine you're considering two bonds: one with a higher coupon rate and another with a lower one. While a higher coupon might seem more attractive, the actual value of the bond depends
Default Risk: Factors Affecting It, How to Assess and Mitigate in the Bond Portfolio
Default risk is a critical concern for fixed-income investors. Imagine this: You've carefully selected a bond, anticipating the steady stream of interest payments it promises. You're confident in its stability, picturing a reliable income
Time to Maturity: How It Works, Impacts, Relation to the Yield Curve
When you invest in a bond with a 10-year time to maturity, you make a long-term commitment. However, if interest rates rise, the value of your bond could decline, potentially eroding your hard-earned savings. Understanding time to maturity plays a
Credit Risk: Why It Matters, Types, How to Assess and Mitigate
Credit risk is the ever-present threat that a bond issuer may fail to fulfill its contractual obligations, such as repaying principal or making interest payments. Imagine this: You carefully selected a corporate bond drawn to its attractive yield.
Reinvestment Income: Compound Growth, Benefits and Strategies for Fixed-Income Investors
Imagine your investments working harder for you, automatically growing your wealth over time. This isn't a fantasy; it's the reality of reinvestment income.Reinvestment income refers to automatically taking the dividends, interest, and capital
Unlocking Bond Profits: Navigating the Price-Yield Profile
The price-yield profile is foundational for any fixed-income investor navigating the complex bond market. Understanding how bond prices respond to changing interest rates is not just helpful; it's essential. This knowledge empowers you to make
Valuing a Discount Bond: Unlocking Potential Returns
Imagine you stumble upon a bond trading far below its face value. This isn't just any bond; it's deeply discounted, offering the tantalizing prospect of significant returns. But how do you know if this opportunity is real? And how do you determine if