Bonds and Fixed Income Tutorials - Page 2
This series introduces bonds and fixed income as a disciplined way to understand time, risk, and contractual cash flows in investing. It guides learners from beginner to intermediate levels through how bonds work, why prices and yields move, and the key risks investors face—interest rates, credit, inflation, liquidity, and embedded options. Rather than treating bonds as “safe” or dull, the series explains them as financial promises whose value depends on uncertainty and time. Using clear explanations and real-world examples, learners explore government and corporate bonds, yield curves, credit spreads, bond funds and ETFs, and practical strategies such as laddering and portfolio allocation. Each tutorial emphasizes sound reasoning over yield chasing, helping readers develop a durable framework for using fixed income thoughtfully within a long-term investment strategy.
Showing 11 to 19 of 19 tutorials (Page 2 of 2)
Understanding Bond Liquidity: Why Not All Bonds Trade Equally
In bonds, the price you see is rarely the price you get. Unlike stocks, most bonds trade in opaque, over-the-counter markets where liquidity—the ease of buying or selling—varies dramatically. This tutorial explains how bid–ask spreads act as a hidden transaction cost, why even safe bonds can become difficult to sell in a crisis, and how bond ETFs can create an illusion of liquidity. You will also learn the factors that determine a bond’s liquidity and how market depth and stress events influence trading costs. By the end, you’ll be equipped to factor liquidity into your investment decisions, protecting your portfolio from unexpected losses.
The Market: The Bond Universe in Context – Understanding Government Bonds and the Yield Curve
Bonds are not isolated financial instruments—they are part of a vast and interconnected market that communicates expectations about growth, inflation, and risk. This tutorial explores government bonds, how they are priced, and how the yield curve reflects the collective wisdom of investors. You will learn to distinguish between normal, flat, and inverted curves, and understand what each shape signals about the economy. Through detailed examples and a slow, explanatory style, we reveal the mental model that the yield curve is a map of expectation, not a crystal ball predicting the future. By the end, you will see the bond market as a dynamic ecosystem and understand how government bonds set the benchmark for all fixed income investing.
Corporate Bonds: Capital Structure, Covenants, and Survival
Corporate bonds are a vital part of fixed income investing, but they behave very differently from government bonds because they reflect the unique realities of each company. This tutorial explores the structure of corporate debt, the role of covenants in protecting bondholders, and the critical distinction between senior and subordinated bonds. You will learn how to evaluate default risk versus dilution risk, understand coverage ratios and cash flow metrics, and appreciate why, for bondholders, a company’s survival matters infinitely more than its spectacular success. Through clear examples and practical mental models, we’ll show how to navigate the corporate bond world not with hope, but with a disciplined, defensive view of your legal rights and financial protections.
Beyond Plain Vanilla Bonds: Understanding Municipal Bonds, Mortgage-Backed Securities, and Asset-Backed Investments
This tutorial explores fixed-income securities that go beyond traditional government and corporate bonds. You’ll learn why municipal bonds exist and how tax advantages enhance returns, discover how predictable cash flows from mortgages or other assets are transformed into marketable securities, and gain insight into mortgage-backed and asset-backed securities. Using vivid examples, numeric illustrations, and clear explanations, we unpack their structure, risks, and role in financial markets. By the end, you’ll have a unifying mental framework to navigate even the most complex corners of fixed-income investing with confidence and clarity.
Bond Funds and ETFs: Owning Bonds Indirectly
Investing in individual bonds can be rewarding but also challenging, especially when it comes to managing large portfolios, tracking interest rate changes, and maintaining diversification. Bond funds and ETFs offer a practical way to access bonds indirectly, pooling investor capital to trade and manage a diversified portfolio. This tutorial explains how bond funds work, how net asset value (NAV) changes, why constant maturity affects returns differently than owning individual bonds, and what fees and diversification mean in practice. By the end, you will understand when bond funds are appropriate for your portfolio and how they trade certainty for flexibility and professional management.
Using Bonds in a Portfolio: Allocation, Stability, and Income
Bonds are more than just safe investments or sources of steady income; they play a critical role in shaping the behavior of an investment portfolio. This tutorial explores how bonds reduce portfolio volatility, provide predictable income, and allow investors to match investments to time horizons and risk tolerance. We will demystify common misconceptions about how bonds move relative to stocks and explain how different types of bonds serve distinct portfolio goals. By the end, you will understand why bonds are not just return-generating assets—they are tools that help control risk, stabilize outcomes, and support long-term wealth creation.
Building a Simple Bond Ladder: A Practical Walkthrough for Predictable Income and Risk Management
Creating a bond ladder is one of the most effective ways to manage cash flow, reinvestment risk, and interest rate uncertainty without trying to predict the market. This tutorial walks you through a practical, step-by-step approach to constructing a bond ladder tailored to a real investor profile. You will see how staggering maturities provides predictable income, simplifies reinvestment decisions, and reduces overall portfolio risk. By following a disciplined schedule rather than chasing market timing, investors can create a reliable framework for income planning and long-term financial stability.
Active vs Passive Fixed Income: Understanding Costs, Taxes, and What You Really Keep
Deciding between active and passive fixed income investing requires understanding not just potential returns, but also fees, turnover, and taxes that can quietly reduce what you actually keep. This tutorial explores the claims of active managers, the mechanics of bond index construction, and how costs can erode performance over time. We also examine the basics of tax treatment for fixed income, including accrued interest, original issue discount, and municipal bonds. By the end, you will have a clearer mental model: in fixed income investing, what you retain after costs and taxes often matters more than headline yields, helping you make smarter portfolio decisions.
Common Bond Myths and Costly Mistakes: How to Avoid Traps That Undermine Your Fixed Income Returns
Many investors assume bonds are always safe or that higher yields automatically mean higher returns, but these beliefs can lead to costly mistakes. This tutorial explores the most common bond myths, from yield chasing and rising rate fears to callable bond traps. By understanding where equity intuition fails and how fixed income behaves differently, investors can make smarter decisions, avoid hidden risks, and preserve long-term wealth in a bond portfolio.