Ever wonder why people say bonds are such a good investment?

 

In this episode, I speak with Murray Williams about how bonds can fit into your investment portfolio and play a part in portfolio theory. The move up in interest rates over the last year and a half has actually created a potential breakaway from the 40-year downtrend in interest rates, which could have a big impact on the economy. Unfortunately, forecasting where rates will go in the future proves to be a very difficult task.

 

Key Points in the Podcast:

-The power of compound interest

-Types of bonds

-The inverse relationship between a bond’s price and its interest rate

-The difficulty of market timing

-The danger of investing with borrowed money (margin)

-The benefit of diversification: reducing drawdowns to your portfolio

-Debt instruments can serve the same purpose as cash as dry powder for opportunistic purchases, but provide superior returns to cash

 

Lastly, you can subscribe to The Post Money Plan podcast here.