You CAN Lose With Bonds

Big losses in the stock market can send investors scurrying for “safe” investments. But what is a “safe” investment? Stocks are risky because stock prices go up and down all the time—sometimes wildly so—and if you have money invested in stocks, the value of your original investment can drop substantially. In contrast, many investors put…

 

How to Buy Individual Bonds: A Fixed-Income Toolkit

Once you’ve learned about bond basics and reviewed the vast number of bond choices, you’re ready to make decisions on how to invest your funds in bonds. Basically, you have two choices: You can purchase individual bonds, or buy them packaged together as funds. Both choices offer certain advantages. The most compelling reason to buy…

 

Bond Market Liquidity and Its Impact on Your Portfolio

There are many headlines warning investors about the next possible financial emergency—the lack of liquidity in the bond market. The meaning of liquidity and the essence of the problem are not obvious. The media tends to look at the bond market as a monolithic block with bond yields either rising or falling. However, there are…

 

Defined-Maturity Funds: A Bond Alternative With Compromises

This article originally appeared in the October 2013 issue of the AAII Journal. Interested in the benefits that individual bonds can offer, but not ready for the complications? The hybrid defined-maturity bond funds are one alternative. What are they and what do you need to know before investing? As the name implies, defined-maturity bonds cease…

 

TIPS for a Low-Inflation Climate

In an article for WSJ.com, Michelle Perry Higgins discusses Treasury inflation-protected securities (TIPS), and how they may fit into bond allocation strategies in a low-inflation environment. When TIPS are issued by the Treasury they come with an interest rate that doesn’t change, like most bonds. The inflation protection works through increases in the principal value of…

 

Is There a Bond Market Liquidity Crisis?

The Wall Street Journal reported today on a growing debate in investment circles: Has bond market liquidity deteriorated since the financial crisis? Now, according to the report, the International Organization of Securities Commission is trying to address the issue. IOSCO surveyed about 100 banks, asset managers, trading platforms and regulators from August to October, according…