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 5 factors create poverty?

Welcome to Finance and Fury, the Furious Friday edition This episode is a flow on from the previous furious Friday episode question from Nick, about poverty. Last episode we talked about how poverty is defined and the economic factors of poverty, which play only a...

How is traditional asset diversification is getting harder in a world with increasingly correlated asset classes?

Welcome to Finance and Fury Traditional asset class allocation Diversification getting harder Diversification in a world where most asset classes are becoming correlated Diversification: what it is and isn’t Diversification across asset classes is one of the most...

Investment allocations and structures that can last the test of time and how to ensure that this can be passed to the next generation of family members?

Welcome to Finance and Fury, The Say What Wednesday Edition.  Today's question is from Mario  Thanks so much for continuing to put together your insightful and informative podcasts. I have a question about investment strategies that last the test of time and can...

Are K Waves useful in the modern economy to forecast where we are likely to head?

Welcome to Finance and Fury, the Furious Friday Edition Today is a follow on from Last FF ep – on K waves – if haven’t listened – worthwhile to go check Today – is the cycle relevant today with central banks – and go through the most recent cycle – meant to start in...

Build to rent: Why are Banks and Super Funds becoming large Corporate Landlords?

Welcome to Finance and Fury,  Past few Monday eps on Share concentration – and the holdings and influence that super funds have Today – talk about the legislation put into place and the plans going on now where you might end up renting an apartment from your super...

Say What Wednesdays: Petrol Prices are going up – why this is and what to do about it!

Say What Wednesdays Petrol Prices are going up – why this is and what to do about it! Australian motorists are suffering the biggest annual increase in petrol prices in 9.5 years as global factors combine to slug drivers at the bowser. ACCC - 2017-2018 financial year...

Goals for the New Year

Welcome to Finance and Fury Welcome to the new year, depending on when you listen it may be new year’s eve or the new year  Hope you are in for a good night, or not recovering from one. Starting off with a question; looking back on the year, are you in a better...

Say ‘What’ Wednesdays: Is it time to jump ship? Should you sell your bank shares?

Say 'What' Wednesday Is it time to jump ship? Should you sell your bank shares? Today’s question comes from Jake. He asks “should I sell my bank shares, given the recent fall out from the royal banking commission?” IMPORTANT: This episode comes with a general advice...

Furious Fridays: Dissecting Labor’s plans for housing affordability

Furious Fridays Dissecting Labor’s plans for housing affordability Welcome Finance and Fury’s Furious Friday episode. Today we’re answering the question we asked on Wednesday about Labor’s polices and their promises to lower housing prices/increase affordability. If...

The future of property supply in Australia

Welcome to Finance and Fury. In this episode we look at the future of the supply of property in Australia. We will talk about the availability of land in Australia, look at the population density and supply of developments, as well as what the future supply has in...

Pin It on Pinterest

Share This