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Bonds, Second Edition

Book Description

Updated edition of the established classic on investing in bonds

In Bonds: The Unbeaten Path to Secure Investment Growth, Second Edition, the fully revised and updated edition of the classic guide to demystifying the bonds market, veteran investor husband and wife team Hildy and Stan Richelson expose the myth of stocks' superior investment returns and propose an all-bond portfolio as a sure-footed strategy that will ensure positive returns. Designed to educate novice and sophisticated investors alike, as well as to serve as a tool for financial advisers, the book explains why and when bonds can be the right choice. Case studies, detailed bond strategies, and a financial planning overview bring home the value of bonds in achieving financial goals.

Presenting a broad spectrum of bond-investment options, and describing how to purchase bonds at the best prices, the book shows how to make real money by investing in bonds. The strategies presented here are designed to help the reader determine how to use bonds to take control of their own financial destiny.

  • New edition includes information on corporate bonds, emerging market bonds, municipal bonds, the new global ratings, and how to protect against municipal defaults

  • Looks at how bond portfolios protected against market volatility in the 2007-2008 crash and how they can do the same in the future

  • Includes information on how the bond market has changed

  • The wealthiest investors and financial advisers use the bond strategies outlined in this book to maximize the return on their portfolios while providing security of principal

With more bond options available than ever before, Bonds continues to be a must-have for anyone looking to understand the investment opportunities available to them.

Table of Contents

  1. Cover
  2. Title
  3. Copyright
  4. Dedication
  5. Contents
  6. Foreword
  7. Preface
  8. Acknowledgments
  9. Introduction
  10. Part I: Clearing the Cobwebs
    1. Chapter 1: Bonds
      1. Examining the Myths
      2. A Second Look at Risks and Returns
      3. Stock Market Volatility: The Impact on Retirement Planning
      4. Why Bonds Are a Better Investment than Stocks
      5. Individual and Institutional Investors: How They Differ
      6. Key Questions to Ask about Whether You Should Invest in Stocks rather than Bonds
      7. Notes
    2. Chapter 2: The All-Bond Portfolio
      1. Advantages of the All-Bond Portfolio
      2. Designing the All-Bond Portfolio
      3. A Word about Other Bonds
      4. The All-Bond Antidote to Greed and Fear
      5. Notes
    3. Chapter 3: Adopting the All-Bond Portfolio
      1. A Poor-Fitting Portfolio
      2. A Consultation with Stan Richelson
      3. A Financial Plan Aligned with Objectives
      4. Note
  11. Part II: Bond Basics
    1. Chapter 4: The Evolution of a Bond
      1. Learning the Language
      2. The Early Years
      3. A Colonial Debut
      4. After the American Revolution
      5. Entering the Twentieth Century
      6. Changes in the Twentieth Century
      7. A Modern Metamorphosis
      8. Great Recession of 2007–2009
      9. The Internet’s Impact on Bond Buying
      10. Notes
    2. Chapter 5: The Life of a Bond
      1. By Way of Background
      2. Preparing a Bond Issue
      3. Understanding Risk
      4. A Bond’s Cost and Yield
      5. Total Return
      6. Cash Flow upon Death: The Estate Feature
      7. Mind Mr. Market
      8. Key Questions to Ask When Purchasing a Bond
      9. Notes
  12. Part III: Bond Categories
    1. Chapter 6: U.S. Treasury Securities
      1. The Big Picture
      2. U.S. Treasury Notes and Bonds
      3. U.S. Treasury Bills
      4. STRIPS
      5. TIPS
      6. Key Questions to Ask about All Treasury Securities
      7. Notes
    2. Chapter 7: U.S. Savings Bonds
      1. Simple Investments with a Few Complexities
      2. Series EE Savings Bonds
      3. Series HH Savings Bonds
      4. Series I Savings Bonds
      5. Key Questions to Ask about Savings Bonds
    3. Chapter 8: U.S. Agency Debt
      1. Major Debt-Issuing Agencies
      2. Key Questions to Ask about Agency Bonds
      3. Notes
    4. Chapter 9: U.S. Agency Mortgage-Backed Securities and Collateralized Mortgage Obligations
      1. Mortgage Securities Guaranteed by the Agencies (Agency MBSs)
      2. MBSs: A Complex Structure
      3. The Agencies
      4. Agency Mortgage-Backed Securities
      5. Key Questions to Ask about Mortgage-Backed Securities
      6. Collateralized Mortgage Obligations
      7. Key Questions to Ask about CMOs
    5. Chapter 10: Municipal Bonds
      1. Why Buy Munis?
      2. Munis: The Opaque Market
      3. Default Risk Considered
      4. Risks in Common Bring about Change
      5. Ratings and Municipal Bond Insurance
      6. Purchasing New Issue Municipal Bonds
      7. Prerefunded and Escrowed Bonds
      8. Protect Your Muni Bond Portfolio?
      9. Taxes on Municipal Bonds
      10. Key Questions to Ask about Muni Bonds
      11. Notes
    6. Chapter 11: Municipal Bonds
      1. Tax-Exempt or Taxable Bonds? How to Decide
      2. Taxable Municipal Bonds
      3. Private Activity Bonds
      4. Tax-Exempt Municipal Bonds
      5. Checking Prices on Municipal Bonds
      6. Key Questions to Ask about Types of Municipal Bonds
      7. Notes
    7. Chapter 12: U.S. Corporate Bonds
      1. The Big Picture
      2. Key Categories of Corporate Bonds
      3. Corporate Medium-Term Notes
      4. Corporate Retail Notes
      5. Step-Up Bonds, Notes, and Debentures
      6. Corporate High-Yield Junk Bonds
      7. Corporate Convertible Bonds
      8. Price-Checking Corporate Bonds
      9. Key Questions to Ask about Corporate Bonds
      10. Notes
    8. Chapter 13: International Bond Markets
      1. Definition of Terms
      2. Trading Blocs
      3. Foreign Bonds
      4. Key Questions to Ask about International Bonds
      5. Notes
    9. Chapter 14: Bond Look-Alikes
      1. Certificates of Deposit
      2. Key Questions to Ask about Certificates of Deposit
      3. Single-Premium Immediate Fixed Annuities
      4. Key Questions to Ask about an Immediate Fixed Annuity
      5. Deferred Fixed Annuities
      6. Key Questions to Ask about a Fixed Deferred Annuity
      7. Nonconvertible Fixed Rate Preferred Stock
      8. Key Questions to Ask about Preferred Stock
      9. Dividend-Paying Common Stock
      10. Key Questions to Ask about Common Stock
      11. Notes
  13. Part IV: Options for Purchasing Bonds
    1. Chapter 15: How to Buy Individual Bonds
      1. Buying Online
      2. Pricing Information
      3. Key Questions to Ask about Buying Bonds Online
      4. Choosing a Broker
      5. Evaluating Bond Prices
      6. Key Questions at the Point of Purchase
      7. Notes
    2. Chapter 16: Bond Funds
      1. Common Ground
      2. Checking the Costs: Hidden and Unhidden
      3. Fund Categories
      4. Key Questions to Ask about Types of Bond Funds
      5. Notes
    3. Chapter 17: Bond Funds
      1. Money Market Mutual Funds: Taxable and Tax-Exempt
      2. Municipal Bond Funds: Tax-Exempt
      3. Taxable Funds
      4. Municipal Bonds Funds: Taxable
      5. Corporate Bond Funds
      6. Government Bond Funds
      7. Strategic or Multisector Bond Funds
      8. Key Questions to Ask About Choosing a Bond Mutual Fund or ETF
      9. Notes
    4. Chapter 18: Choosing a Bond Mutual Fund or ETF
      1. Bond Fund Fees
      2. Understanding Yield
      3. The Search Begins
      4. Key Questions to Ask When Exploring Bond Fund and ETF Search Engines
      5. Notes
  14. Part V: Bond Investment Strategies and Richelson Investment Rules
    1. Chapter 19: Financial Planning Framework for Bond Investing
      1. Create Cash Flow with Bonds
      2. The Basics of Creating Your Financial Plan: The Four-Step Financial Planning Process
      3. Reevaluating Your Portfolio
      4. Key Questions to Ask about Financial Planning with Bonds
    2. Chapter 20: Financial Planning with Bonds
      1. Baby Boomers Design a New Financial Plan
      2. You Are Rich! Why Are You Worried?
      3. Changing Course
      4. Meeting a Need for Safety
      5. An Unanticipated Transition
      6. Ownership of Stock in a Private Company
      7. Stock Options Pay Off Big
      8. Planning for College Expenses
      9. Invest a Large Amount of Cash at One Time
      10. Socially Responsible Investing
      11. Summary of Key Takeaway Points
      12. Notes
    3. Chapter 21: How to Make the Most Money from Bonds
      1. Knowing When to Buy and Sell
      2. Strategies for Deciding When to Sell
      3. Strategies for Finding Bargain Bonds
      4. Strategies for Avoiding Overvalued Bonds
      5. Strategies for When Interest Rates Are High or Rising
      6. Strategies for When Interest Rates Are Low or Falling
      7. Investing for the Highest After-Tax Yield
      8. Investing and Risk Tolerance
      9. Strategies for Safe Investing
      10. Investing for Income Needs and Financial Goals
      11. If You Are Starting out with Less than $25,000 to Invest
      12. Obstacles to Committing to an All-Bond Portfolio
      13. Notes
  15. Appendix: Useful Web Sites
  16. About the Authors
  17. Index