“The Bond Book” by Annette Thau is a must-read for any investor in any asset class. The bond market is much larger than the stock market. You wouldn’t know that by comparing the media coverage of the two.
Bonds are everywhere, in every asset class, government entity, corporation, and mortgage ecosystem. To be a successful investor, you must understand how interest rates affect all bonds.
I read this book to become more knowledgeable about the bond market. The bond market can predict recessions, bull markets, and inflation. I wanted to understand why people say “bond investors are wiser than stock investors.”
There is much to learn about bonds, but the main principle is that interest rates affect yield. Mainly, when interest rates increase, bond prices decrease—and vice versa. From there, you get into more particulars like duration, sectors, and credit quality.
1) Treasuries issued by the US Government are the most important bonds in the market. Investors consider them to be risk-free from default. Therefore they are the safest yield investors can buy.
2) All other bonds receive their yield and price evaluations based on the yield of treasuries. Different types of bonds are municipals, corporates, international, and junk.
3) If you are a buy-and-hold investor, much of the bond market will be lost on you—especially if you are buying treasuries. If you plan to sell your bond, you have to take into account the loss of principal.
4) The yield-to-maturity calculations consider bond interest reinvestment. This means that the numbers depend on you reinvesting interest at the bond’s yield. It’s similar to dividend reinvestment in stocks. However, this number is pre-calculated for you. Be careful if you plan to spend your interest outside of the markets.
5) The best way to buy bonds is through the Treasurydirect.gov website. You don’t pay fees, markups, or commissions. You can buy Series “I” Bonds and Treasuries and keep them under one account.
Most of the bond market caters to massive institutional investors (think pension funds). Individual investors have the best opportunity to invest in bonds through the US Government.
If you reinvest the interest into other high-yield bonds or stocks, buy-and-hold treasury investing can give you significant gains.
Outside treasuries and municipal bonds, retail investors can diversify their bonds through bonds funds and ETFs. However, it is good to understand how these funds correlate to treasury yields.
Finally, understanding the yield curve can help you predict where bond yields and prices may travel. No one can guess the future, but it is vital to process what information we do have.
This is a massive book and a must-read for all investors. You’ll walk away with a much larger picture than just the stock market. The bond market is the less emotional brother of the stock market. I highly recommend this book if you are serious about becoming a well-rounded investor.
- PDF of the Month: Don’t Gamble with Retirement 7 (Free 424-Page PDF)
- Free PDF Downloads: Download FREE PDF LIST here
- Financial Mindset: Become CEO of Yourself 2 (Free 196-Page PDF)
- Retirement Planning: Your Retirement Planning Guide 2 (Free 255-Page PDF)
- Investing: How We Plan to Retire on Dividends 2 (165-Page Free PDF)
- Cryptocurrencies: Counting on Crypto 2 (Free 159-Page PDF)
- Real Estate: Financial Independence through Real Estate 2 (Free 123-Page PDF)
- Business: Retire Rich, Retire Comfortable with a Business 2 (Free 185-Page PDF)
- Latest DGWR: Don’t Gamble with Retirement 6 (Free 409-Page PDF)
- Everything!: The Biggest Book on Passive Income Ever 2! (book)(Web Edition)(Art Edition)
- I bought a Kindle Oasis: Check it out on Amazon
- Read My Books for Free: Free Kindle Books Schedule
- Crypto Exchange: My Favorite Crypto Exchange VOYAGER (Join Voyager)
- Kindle Unlimited: Why I Finally Subscribed Kindle Unlimited (learn more)
- Book Reviews: 505 Takeaways from 101 Books (pdf)
- Writing: The Publishing Chronicles (Part 1, Part 2, Part 3, Part 4, Part 5)
- Best REIT- Fundrise: REITs vs. Homeownership (Join Fundrise)
- Follow us: On our Facebook Page and Join our Facebook Group
- Support the Channel on Cash App: $Kingmarine1981
- For more detailed analysis, join my Youtube: MFI YouTube Channel
Monthly Dividend Tracker Template: Buy on Etsy
Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
Leave a Reply