So in another thread someone mentioned corporate bond ladders and that piqued my interest. In the past I've heard of T-bills etc but never really purchased them. I get the basic idea that you're loaning money to a govt entity or a corp in return for an interest rate at maturity similar to a CD. However, when I logged into Vanguard I'm not sure I understand all the columns and how to screen them. So in the attached screenshot is the 9% the interest rate you'll get at maturity from a AAA rated company? What do the other columns mean? How many bonds can you purchase and are they acquired in packs of x no of bonds etc?
How to screen/buy bonds?
- Thread starter dvalley
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FIRE'd@51
Thinks s/he gets paid by the post
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No, that is the coupon, i.e. the rate paid when the bond was issued. You will pay above par (103.695) for this bond which is a yield-to-maturity of 2.457%. IOW, the relevant number to you on that screen shot is the yield-to-maturity (ask). That is the rate you will earn.
robertf57
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May want to get a basic investing book to review this in detail. I generally don’t invest in individual bonds. The bond you circled is selling at a premium over its face value. It has a coupon or payment which you have circled. The actual yield % to maturity and to worst case (say early call or some other event, which here looks to be maturity) are displayed in the other columns. Both based on the bid price and the asked price. Hope that helps
I buy a fair amount of individual corporate bonds. The comments above are both correct answers.
I might add that other data gleaned from this screenshot indicates the following:
* Min order to buy is 1, max is 6 (but this is the first time I have seen a "Call Us" comment, so this bond may have to be purchased with a phonecall, or at least the Vanguard bond desk folks want to explain other details to you about this offering).
* Moody's A3 rating, S&P rating of A- is an "upper medium investment grade" (fairly low risk)
Here is a complete rating chart:
https://en.wikipedia.org/wiki/Bond_credit_rating
* Callable bond (Altria can buy back at will).
* Very short term left (probably issued many years ago) Exp. Date is 11/10/2018, at which time the buyer will get face value (1 bond = $1000 face) back in their account and keep all accrued interest previously paid.
* Initial rate (9.700), pricing and YTM explained by others
If you want much more information on this or any bond, click on the brown colored "Altria Group Inc" line and a window will open with many more details.
This bond has very little life left. In general, interest rates (YTMs) improve if you purchase longer term bonds (not always). Rates (and risk !) are higher with lower quality bonds, so beware. It is a balancing act between payout, risk and duration.
I might add that other data gleaned from this screenshot indicates the following:
* Min order to buy is 1, max is 6 (but this is the first time I have seen a "Call Us" comment, so this bond may have to be purchased with a phonecall, or at least the Vanguard bond desk folks want to explain other details to you about this offering).
* Moody's A3 rating, S&P rating of A- is an "upper medium investment grade" (fairly low risk)
Here is a complete rating chart:
https://en.wikipedia.org/wiki/Bond_credit_rating
* Callable bond (Altria can buy back at will).
* Very short term left (probably issued many years ago) Exp. Date is 11/10/2018, at which time the buyer will get face value (1 bond = $1000 face) back in their account and keep all accrued interest previously paid.
* Initial rate (9.700), pricing and YTM explained by others
If you want much more information on this or any bond, click on the brown colored "Altria Group Inc" line and a window will open with many more details.
This bond has very little life left. In general, interest rates (YTMs) improve if you purchase longer term bonds (not always). Rates (and risk !) are higher with lower quality bonds, so beware. It is a balancing act between payout, risk and duration.
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Freedom56
Thinks s/he gets paid by the post
You should also look at YTW in the case of callable bonds. Most brokers offer tutorial videos on bond investing. I would start there.
See the link below for more info.
Bonds | FINRA.org
The starting point is always research the company. Don't rely on rating agencies as they are rarely forward looking and some of their ratings are very questionable.
See the link below for more info.
Bonds | FINRA.org
The starting point is always research the company. Don't rely on rating agencies as they are rarely forward looking and some of their ratings are very questionable.
COcheesehead
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I buy a lot of individual bonds. Their biggest benefit is predictability for a given time frame. At maturity you get your par ($1000) and over the course of the bond you get your coupons. I like that.
Thanks everyone. I'll dive into it a bit this weekend. I remember doing similar research in the past about 8-10yrs ago but have since forgotten everything I'd then researched, similar to writing covered calls- I've done it but don't remember much anymore.
jazz4cash
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I've been acquiring knowledge on the Fido website so I can consolidate some bonds and CDs in the future. Fido has a lot of tools including CD and Bond Ladder Tools. Having just perused the VG site maybe I just don't know where to look, but it seems to be lacking the level of support that Fido offers (not surprising). OTOH we are grousing in another thread about how confusing Fido can be to navigate.
I did see they have a table/matrix of various bond types w/ rating and maturities that should make it fairly easy to construct a ladder.
I did see they have a table/matrix of various bond types w/ rating and maturities that should make it fairly easy to construct a ladder.
VG site does have a fixed income (corporate bonds, treasuries, CDs, munis etc.) advanced search function where a user can enter the date (month/year) or date range to search on, among many other filters. This can easily be used to find particular investment items by maturity dates, helpful when constructing your own ladder. They also seem to have some sort of ladder tool which may be helpful, but I have not utilized or even tried that tool.
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