Why You Should Invest in Corporate Bonds
[Pages:41]Why You Should Invest in Corporate Bonds
Steve Shaw Founder & President, BondSavvy
steve@ February 27, 2019
BondSavvy Disclaimer
InvestorG2 LLC d/b/a BondSavvy is not registered as an investment adviser under the Investment Advisers Act of 1940, as amended ("Advisers Act"), or the securities laws of any state or other jurisdiction, nor is such registration contemplated.
Any screenshots, charts, or company trading symbols mentioned are provided for illustrative purposes only and should not be considered an offer to sell, a solicitation of an offer to buy, or a recommendation for the security.
As BondSavvy operates under the publishers' exemption of the Advisers Act, the investments and strategies discussed in this presentation do not take into account an investor's particular investment objectives, financial situation or needs. In making an investment decision, each investor must rely on its own examination of the investment, including the merits and risks involved, and should consult with its investment, legal, tax, accounting and other advisors and consultants.
The information in this presentation is based on data currently available to Shaw, as well as various expectations, estimates, projections, opinions and beliefs with respect to future developments, and is subject to change. Neither Shaw nor any other person or entity undertakes or otherwise assumes any obligation to update this information.
There are risks inherent in investing in bonds, which may adversely affect the bonds' investment returns. These risks include, for example, market decline, interest rate fluctuations, inflation, default, liquidity, and asset class risks. There is no guarantee that investors will be able to meet their investment objectives. Past performance is not indicative of future results. Investors could lose all or part of their investment in a bond, particularly when investing in a high yield bond. Investing in bonds could also produce lower returns than investing in other securities. Investing in bonds does not constitute a complete investment program.
Don't Mess with....
3
Individual Corporate Bonds
? Contractual interest payments and return of principal
? Senior to common and preferred ? Financial covenants ? Held up when stocks collapsed in Q4 2018
4
Why own individual corporate bonds?
? Higher potential returns than funds ? Match your risk and return objectives ? Lower cost of ownership than funds
-- Read recent BondSavvy blog post ? Not complicated once you learn the basics
5
Individual corporate bonds are an important balance to stocks
JANUARY 3 PRICE PERFORMANCE
Apple Stock
Apple 3.45% '45 Bonds
Falls 10% from $158.34 to $142.09
Unchanged at 88.50
6
Bonds Can Do More Than You Think
Pinpointing value and selling bonds prior to maturity can enable investors to achieve high returPnrsice Appreciation of Selected Investments
Price Appreciation of Selected Investments
AppBPleor3ni.8cd5e0%A'4p3 p(10r/e28c/i1a3)tioBnonodfPSreicle8e5:.c0In7tevedstImnveentstDmat9ee5.n3v2tss. Sell Date
Apple 3.850% '43 (10/28/13)
85.07
95.32
Jefferies 6.500% '43 (1/19/17)
AJpPepufAMflreepcircShp3iroeal.oe8slssd5e6o3:0d.f.55t8%:0/45190.'0004/%%0/13028'4('%8413/03'15(/1352/8(12/9/1/1312)7/1) 6)
85.07
92.17
103.50 104.42
95.32 103.50 104.42
99.69
Investment Date YTM
Annualized Return Through Sale
4.8%
6.4%
JeMCffaiCePcbarrubiolreelscesvohvi6fsaits.is5io4oe0.nnd00:055%01..88%2'774/553'85%%/5(11'2('5/2221/29(11/221//7186)/)15) MCiacbrolTesovoyisfsStioRo4nl.Ud05s:0.1810/07%95.3/%'715585'2%(22'1(/17122(/2/8/11/612)5/1) 6)
79.25 79.25 83.08
92.17 92.17
103.50 104.42 9989..9112 999.192.61902.59
10.1%
17.6%
CabTloeTyvoPsisyuRisorUcnRhs5Ua1.ss80e7.1d3507:%.523%/7'215'221%/7(11'(61227//81/21/156) ) Redeemed: 9/29/16
79.25 83.08
99.11202.59
24.6%
54.2%
Toys R Us 10.375% '17 (2/12/16)
83.08
102.59
* Represents three corporate bond investments made by BondSavvy founder Steve Shaw in his personal account.
7
Here's how NOT to invest in bonds
Investor
Financial Advisor
Bond Funds & ETFs
1% Fee
0.1-1% Fee
The status quo works well for Wall Street but NOT individual investors
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