Tag archives: Bonds

When Will Negative Interest Rates End?

Last update on Aug. 1, 2016.

Image Credit: Sangoiri / Shutterstock.com

At the beginning of every month, I brief members on how MoneyGeek's regular portfolios have performed and comment on the state of the financial markets. In this update, I’ll explain why negative interest rates persist, and what I believe will trigger their end.

 

Performance of Regular Portfolios

The performance of MoneyGeek's regular portfolios for the month of July 2016 were as follows:

 

Last Month

Last 12 Months

Since Apr 2013

Slightly Aggressive

+4.7%

+2.9%

+55.6%

Balanced

+4.3%

+3.1%

+46.5%

Slightly Conservative

+3 ...

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Is The Slide In Bond Prices Just Beginning?

Last update on July 6, 2015.

Money under mattress

"If I had an easy way, and a non-risk way, of shorting a whole lot of 20- or 30-year bonds, I’d do it." - Warren Buffett

At the beginning of every month, I brief members on how MoneyGeek's regular portfolios have performed and comment on the state of the financial markets. In this update, I talk about why bond prices have been going down recently.

 

Performance of Regular Portfolios

The performance of MoneyGeek's regular portfolios for the month of May 2015 were as below:

 May 2015Last 12 MonthsSince Apr 2013
Slightly Aggressive  +2.8 ...

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Preferred Shares Are Not As Attractive As They Seem

Last update on June 4, 2015.

 

In recent years, many people have been drawn to the idea of investing in preferred shares.

Preferred shares are "hybrid" investments that behave like stocks in some ways and behave like bonds in others. Like bonds, preferred shares offer regular payments, but like stocks, those payments are in the form of dividends which are taxed at lower rates. When you combine these features with the fact that preferred shares generally yield higher than bonds, it's not hard to see why many people like them.

However, Canadian preferred shares have some pitfalls that investors should know about, especially in ...

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5 Consequences for Canadians of the Bank of Canada's Rate Decision

Last update on Jan. 26, 2015.

Bank of Canada

 

Last Wednesday, the Bank of Canada (BoC) made a surprise move and cut the benchmark interest rate from 1% per year to 0.75% per year. The BoC is the government entity tasked with setting short term interest rates in Canada.

This move by the BoC will affect Canadians in a number of ways, especially for those of us who invest in stocks and bonds. In this article, I’ll explain 5 such consequences that we as Canadian investors can expect.

 

Why the Bank Of Canada Lowered Rates

First, let me explain why the BoC would want to move ...

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Why XSB.TO Is In The Regular Portfolio

Last update on Feb. 21, 2015.

 

Currently, the biggest component of every regular portfolio apart from Portfolio 5 is the iShares Canadian Short Term Bond Index ETF (Ticker: XSB.TO). As the name suggests, XSB.TO contains hundreds of different bonds, the majority of which are owed by the various Canadian governments. That means when you buy shares of XSB.TO, you're really buying tiny slices of hundreds of very safe bonds.

Some members have emailed to ask me whether they should hold bonds at all. These members say that they don't need the money for at least a decade, so they can ...

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Why An Improving Economy Could Hurt Stocks

Last update on Sept. 4, 2014.

Economy

 

By all indications, the U.S. economy is doing well. Their GDP has grown 2.8% over the past year, and their unemployment has went from 10% in 2009 to just over 6%. More companies are looking for new hires, and less people are getting laid off each week.

With the economic recovery in full swing, many people expect U.S. stocks to continue to do well. After all, an improving economy means more corporate profits, right?

Unfortunately, it's not that simple.

In this article, I'll explain why an improving economy may actually hurt stock prices.

  ...

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What's Happening To Canadian Bonds? (XBB)

Last update on March 3, 2015.

Buy National War Bonds

 

A little over a year ago, I published an article in which I argued that holding mid to long term bonds were a bad idea. In the article, I also criticized the Canadian Couch Potato for incorporating an ETF that holds such bonds in their portfolio.

In this article, I will give an update on what has happened to the bond market since then, as well as what I see happening going forward.

 

XBB Performance

For those of you who don't know, the Canadian Couch Potato is a popular blog dedicated to index investing. While they generally ...

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The Perils Of Investing In High Yield Bond ETFs

Last update on June 4, 2015.

 

Suppose you're nearing retirement, and you're looking at some investment options. Because the memory of 2008 is still fresh in your mind, you feel nervous about investing in stocks. You look at Canadian government bond yields, and you shake your head - long term bonds barely yield 2.5%.

Can't you do better?

So you look around, and you come across ETFs that invest in high yield bonds. The interest on these ETFs is significantly higher than on government bonds, often offering above 4.5%. With these ETFs, you can finally enjoy the dual benefit of safety ...

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2013 Financial Markets In Review

Last update on Jan. 6, 2014.

 

U.S. Stock Market Had A Remarkable Year

2013 has been a great year for stock investors.

U.S. stocks made headlines by going on a tear - rising 32% during the year. The stock market rises by over 30% about once or twice in a decade, and last year was one such time that it did. It also happened to be the best return in 16 years.

To put the number further into context, if you purchased a 10 year Canadian government bond that yields 2.8% per year today, it would take 10 years for your money to ...

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Short Course On Investments Episode 4: Bonds and GICs

Last update on Aug. 21, 2014.

In the Short Course On Investments, you will learn the basics of investing through simple everyday language. The course covers the same material as The Short Book On Investments.

In Episode 4, I talk about bonds and GICs - what they are, and the factors that influence their pricing.

 

 

Transcript:

Hello and welcome, my name is Jin Choi, and I’m the Founder or MoneyGeek. Welcome to the 4th episode of the short course on investments. Today, we’re going to cover Bonds and GICs.

Simply put, a bond is someone’s debt. If you own a bond, that means someone owes ...

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