Bonds - Part 2 / Bonds பகுதி - 2 

Glad you like them!

Glad to know that it is useful.

Glad it was helpful.

மிக்க நன்றி🙏🏽. Dailym video போடுற அளவுக்கு நான் freeya இல்லையே.🤣

Thank you 🙂

மிக்க நன்றி!!

Thank you 👍

What is so special about tier 2 bank bond bro?!!!

@@nandakishore671 Banks failure is next to impossible. Any Government won’t let banks to fail since it badly impacts on people’s confidence on financial system. Moreover bonds interest rate is higher than that of FDs. However it’s not available in OPEN market to purchase. Experts like our Mr. Vijay would advice us further in this regard.🤞

@@arunkumarradhakrishnan7734 ama correct ta bro,tier 1 bank bond pathi solunga

Sorry guys. I am not really expert on that. Let me see if I can find info on that.

O

Ol..op

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FD is safer as it is giving fixed interest. Bonds trade everyday and the price changes every day. It is riskier than FD. Better - depends. If you want better returns, you need to go with bonds. Lesser risk - FD.

@@InvestmentInsightsTamil Thanks you Sir. Can you make a video on how to save money for kids education in India. Before 5 years I was searching for kids education savings plan and one guy sold be an ULIP SBI eWealrh insurance plan. Only after seeing your video on Life insurance I realised my ignorance and mistake.

@@svigneshanand That is going to be the next episode.

Bonds vs Bond funds vs Bond ETFs? Is one better than the other if the plan is to hold it until maturity? Thanks

Better to get Bond funds. The fund will rotate the bonds in the portfolio so that we do not have to worry about its maturity date.

It is in my To Do list.👍🏽

There are plenty of debt funds. Check valueresearchonline.com and choose the one that suits you. S&P 500 and Nasdaq 100 are offered in Motilal Oswal fund house. Check it out.

@@InvestmentInsightsTamil thank u sir for ur valuable feedback. Can I put them in lumpsum also we live in abroad and planning to shift to India and we sold our house n abroad, so we have some lumpsum amount. That's y asking sir. Am aware of sip. But is it possible to invest in lumpsum also?

@@InvestmentInsightsTamil thank u sir..

What do you like to know about it? This is the calculator I use: www.moneychimp.com/calculator/discount_rate_calculator.htm

Do not try to predict anything in the market. It never works the way we predict. Just invest for long term. If we are worried about short term movements, we should not be in the market.

Check its credit rating. If it is AAA, sure go for it. If you are not sure about the credit quality, it is better to stay away from it.

Siva, When I say market interest rate, I meant the prevailing interest rate in the money market. And Yes, it is dependent on Fed Funds rate. So for your example, if the fed funds rate has decreased, that would have led to the market interest rate going down as well. That means, the bond price would have gone up as it has inverse relation ship to market interest. So if we have bought a bond during higher interest period, the price of that bond would be higher now as we are on low interest period now. www.sec.gov/files/ib_interestraterisk.pdf

@@InvestmentInsightsTamil Thanks Vijay. Just to some up, if i had bought bonds during higher interest rate, say few years ago and now if i want to sell in secondary market, i will be in loss / gain. What I understand is same bond which i have bought few years ago, is trading at higher value because of reduction in interest rate. so if i sell the one now i will be in loss, is that right. 2) I also understood that change in rate have no impact if i hold till maturity rate.. pls advise

@@InvestmentInsightsTamil Thanks Vijay. Just to some up, if i had bought bonds during higher interest rate, say few years ago and now if i want to sell in secondary market, i will be in loss / gain. What I understand is same bond which i have bought few years ago, is trading at higher value because of reduction in interest rate. so if i sell the one now i will be in profit, is that right. 2) I also understood that change in rate have no impact if i hold till maturity rate.. pls advise. 3) when fed rate is close to zero, i assume there is no point of buying bond now, because assuming int rate goes up in few year from now, if i want to sell down the line i would loss the value

Siva, Very good questions. 1. That is correct. If you decide to sell a bond after the interest rate has gone down, the price would have gone up. 2. That is correct. Change in market interest rate will not have impact if you hold till maturity as you will be getting the interest continuously till the bond matures. 3. I wouldn't say no point as you can still earn some interest. It's just that it wont be as attractive as during higher interest period.

Good Question. Bonds give fixed interest, but the bonds price keep changing everyday depending on the market interest rate. If the underlying bonds price changes everyday, the NAV of the fund will change as well.

@@InvestmentInsightsTamil sir still confusing If im holding a gilt mutual fund wherin totally 5 no. of bonds are there,if the 5 bonds gives interest at its own time period, the nav will be constant right?? Or the bonds itself traded between amc Pls clarify at basic lvl sir🙂

Yes, the NAV would have stayed the same if the underlying bond price stays the same. But the price of the bond changes everyday depending on the market conditions even though it gives the fixed interest. Why does it change? - That explanation is right after the intro in this video. If the bond price changes everyday, the NAV of the fund holding those bonds will change as well. It is very similar to Stock Funds. The underlying stocks can give dividends just like the interest from the bonds here. But if the price of the stock changes everyday, the NAV of the fund holding that stocks change as well. Exact same thing is happening here as well. Hope this makes sense.

Sure.

Thank You. Vanguard BND is a good investment grade diversified bond fund that focuses on US: investor.vanguard.com/etf/profile/bnd International: investor.vanguard.com/etf/profile/bndx

@@InvestmentInsightsTamil Thank you!

@@InvestmentInsightsTamil BND returns over last 10 years is 1.5%. Doesn't even beat inflation. Of course, it is due to the fed rate hikes over the past year. What is our take away from this? And does this mean that this is a good time to add bond exposure if your portfolio is 100% equity?

@@rajukamal We can only say relatively. Now is better than in 2022. Is it good? Depends on what you are looking for. If you are looking for safety, then yes. If you are looking for growth, then equity is a better option.

@@InvestmentInsightsTamil Thanks Vijay guru for the response. I also realized that you got to factor in dividend yield along with returns and in which case BND might slightly beat inflation and as you said gives safety. I am not sure if you have covered in your videos so far but a way to compare investments comprehensively with returns, dividend yield and dividend reinvestment would be a good topic.

Fed reserve interest ratea kootuna, bonds oda vilai kuraiyum.

Sure you can. It is no different from any other residents in USA. As long as you are here in USA, you can have a brokerage account and own any securities in that account. Tax - you would file as any other resident and same law applies to you as well. Your marginal tax rate is the tax for short term gains and 15% for Long Term Capital Gains. Saying that, I would recommend to take advantage of a 401K account, if you employer offers one and ROTH IRA. Both offer good tax benefits that makes a huge difference in long term. Watch my 401K video if you need more details on that. It is hard to say which market is better. It is to our advantage to invest in both so that we get both Indian and American market exposure. Watch my Stock Portfolio Recommendation video for more details.

Thank you very much sir but if we invest good amount it will be compounded right but i think 25 percent of my saving want to be 401k right sir and i am aggressive investor of 18 percentage to get in stocks sir . Thank you sir your videos are wonderful

I am not sure if I am following what you are saying. But yeah, contribute to your 401K and ROTH IRA if you can before considering a brokerage account.

@@InvestmentInsightsTamil S&P 500 and NIFTY 50's last 10 year CAGR return is almost same (~14% CAGR) but INR is depreciating ~ 3% CAGR over last 10 years against USD. which means NIFTY would have given 9% CAGR whereas S&P 500 would have given 15% return in dollar terms. I recommended investing in S&P 500 irrespective of location, you will pocket more return in long run.

Watch the Asset Allocation video.

@@InvestmentInsightsTamil Already watched that videos sir, but it’s not detailed comparison. In this video, you said 5% interest (coupon rate) given in bonds. I know it’s only an example, also the interest rate will reduce/ increase based on ratings. it seems like there is a chance that interest will be lesser than Bank FD 5.35% for 5 years. Then why any investor wants to invest in Bonds instead of FD.

It depends on the type of bonds. In general, Bonds will give you higher returns than FD, but it comes with risk - not like no risk FD.

@@InvestmentInsightsTamil got it , understood. Thanks.

I would not recommend buying individual bonds. Better to buy a debt fund.

Invest panni kadana adaikavey mudiyaathu. Ullathu thaan poghum. Atha pathi yosika kooda seiyaatheenga. Ungaluku irukura orey option, unga varumaanatha kooturathu. Yeppadi unga varumaanatha kootalaam, entha skilla valathukitta varumaanatha koota mudiyum - antha anglea yosinga. Kandipa nalla vali kedaikkum. Good Luck!

@@InvestmentInsightsTamil tg sir😌🙏

It is same as face value.

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