Welcome to Finance & Fury, the ‘Say What Wednesday’ edition. This week’s question comes from Gab;

“Hi Louis, I was looking at different asset classes and how someone could get exposure to them (outside superannuation) and got stuck on “fixed income”. If I understand this asset class correctly, if you hold to maturity you get all the capital back. But if you buy ETFs or managed funds you lose this benefit (as you basically just get exposure to the secondary market). Also, I thought the fees were ridiculous, especially with active managers charging 0.5%, when the long-term return is 5-6%. What are your thoughts on this? Thanks, Gab (keep up the good work!)”

Hi Gab, Great question!

Today we’ll focus on explaining Fixed Interest in straightforward terms;

  • What are Bonds, why do they exist, and how do they work?
  • Price, ‘Face Value’ and coupon rate
  • Buying and selling bonds
  • The effects of interest rates on the value of bonds
  • Bond managers – Managed funds or ETFs
    • The role of Bond Managers
    • Costs compared to returns
    • Index bonds
    • Active managers
  • Why buy bonds or other fixed interest assets?
    • Downside protection
    • Higher yield than cash
    • Middle ground to cash
  • The risks and disadvantages
    • Ratings system
    • Maturity
    • Duration
    • Interest rate movements
  • What I look for when buying bonds
  • Franking credits on coupons

 

If you have a question, or want us to cover something else in more depth, let us know at the contact page https://financeandfury.com.au/contact/

Thanks again for listening guys. Until next time!

What will be the next market interventions from Central Banks to achieve inflation targets?

Welcome to Finance and Fury Talked about the inflation targets, interest rates and monetary policy over the past few weeks – Today – go further into looking at a completely controlled economy by Central Banks – To start – look back to an RBA paper from 1975 – this was...

From trading cows to ones and zeros, Pablo Escobar’s money eating rats, and how our money is all debt based currency

Hi everyone and welcome to Finance and Fury! Today we’re going to look at our current monetary system; what is considered money, and also the future of our monetary system. Today’s episode will be a fairly quick episode, and will be an introduction to a series of...

How can the combination of an argument from authority and fear be used as a method of enforcement, allowing the economy to be shut down?

Welcome to Finance and Fury, the Say What Wednesday edition. This weeks question comes from Scott in Texas. “Thank you for your steady course on the social and resultant economic collapse from Govt reaction to the covid 19 virus. I am just as dismayed as you that we,...

Lessons from the Big Short and Michael Burry about high conviction investing over passive investing.

Welcome to Finance and Fury Want to touch on passive investing versus higher conviction investing I watched the Big Short last weekend – many people asked me if I had seen it and were surprised when I hadn’t – don’t watch many finance movies or documentaries – find...

The future of the share market: How central bank intervention will be a dominant factor going forward.

Welcome to Finance and Fury. Investing in the equity or debt markets in the world with greater levels of Central bank interventions – The rebounds of the market – seems to be responding to the Fed and the US Treasury Last week – the ASX recorded its biggest one-day...

[Financial] New Year’s Resolutions: how to get ahead in your finances and be in a better position this time next year

Episode 16 [Financial] New Year's Resolutions: how to get ahead in your finances and be in a better position this time next year Welcome to the New Financial year – looking back on the year, are you in a better or worse financial position than you were this time last...

The Economics of War – conducted for the benefit for the very few, at the expense of millions

Welcome to Finance and Fury, The Furious Friday Edition. War is a racket – Something that always catches my attention is when politicians get on What is one thing they seem to get on about? Police enforcement, regulations on industries On a more global scale - Going...

Bonds; How do they work, when do they increase in value and how do they fit into your portfolio?

Episode 20 Bonds; How do they work, when do they increase in value and how do they fit into your portfolio? Today’s episode stems from the question last week from William about investment bonds (an investment vehicle, kinda like a life insurance product). Today...

Say What Wednesday: Paying your home loan off with debt

Say What Wednesday Paying your home loan off with debt How can you pay off a mortgage with debt? Velocity banking and Offset accounts This question comes from Tom a podcast listener. He asks “Just wondering if you have ever used Velocity banking at all to pay down...

Understanding foreign currency

Episode 31 Understanding foreign currency Welcome to Finance and Fury. Before I start I want to say a massive ‘Thank you’ to our listeners. We cracked 150k downloads in the first 6 months which is phenomenal. Also, thank you to everyone who has taken up the course – I...

Pin It on Pinterest

Share This