There is an old adage for investors that goes something like, “It’s not what you earn, but what you keep, that matters”. This of course relates to expenses like commissions and fees, but it’s primarily about taxes. After all, taxes are one of the few aspects of investing that you can control. For the fixed […]
Last week we talked about the role of bonds in your portfolio. We noted that, while bonds generate income and may generate capital gains (when interest rates decrease, the value of a bond will increase), the primary role of bonds in your portfolio is to dampen the portfolio’s volatility (i.e. reduce the variability of its […]
All of our clients, even the most aggressive investors, own bonds in their portfolios. Why? Because bonds serve a variety of purposes in the construction of a balanced portfolio. They provide income to the investor. The issuer of a bond borrows money from the bond holder (which can be a mutual fund, or an individual […]
A few weeks ago, we discussed interest rates, the 10-Year Treasury Notes and short-term bonds. We briefly mentioned floating rate bonds, a subject to which we return today. To review, in a rising interest rate environment, bonds will lose value. Why? Investors want the best yield possible. If interest rates are rising, investors interested in […]
If you follow interest rates, you may have noticed that the 10-year Treasury note recently closed above 3.00% first time since December 31, 2013. So, what does this mean to you? Let’s start by noting that bond yields rise when bond prices drop. So, when the yield on the 10-year Treasury goes up that means […]
Yesterday one of our clients asked us for the cost basis for a corporate bond that had been in her portfolio. It matured last year (2017) and the principal was returned to our client. Her CPA was working on her taxes and needed to know what our client originally paid for the bond – the […]
With the Federal Reserve planning to continue gradually increasing short-term interest rates, investors should be familiar with the concept of “duration” for fixed income investments. Most investors will understand that a bond’s “maturity” measures how long a fixed income investment lasts, i.e. when they will receive their principal back from the bond issuer. What is […]
Instead of Bitcoin, how about an investment that is guaranteed, pays a relatively attractive interest rate and is free from state and local income tax? I Savings Bonds are issued by the United States Treasury Department. According to Treasury Direct, a government website, I Savings Bonds earn interest which combines a fixed rate and an […]
We’re pleased to have added a new video to our Springwater Wealth website. This video introduces the four investment principles that form the foundation for our investment philosophy, and our approach to building portfolios for our clients. You can watch the video on our Videos page here.
Author and investment guru Bill Bernstein reiterates the dangers of chasing yield in the fixed income market. “I want to take my risk with stocks, not bonds”. Read the entire April 2, 2013 interview in Index Universe here.