Sam Goldfarb
speaker
106 appearances
2 recordings
1 series
first heard Aug 2019
last heard Apr 2021
Sam Goldfarb’s voice in public audio — every appearance, attributed to the second.
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Appearances
Stocks have been doing well.
But it's a short-term pain, maybe for long-term gain, because now if you didn't hold bonds before and you buy them now, you're going to get a higher interest rate than you would have last year.
And I think people who are interested in holding bonds generally don't like when interest rates are super low because that means those regular interest payments are lower.
It does depend on what kind of bonds you're buying.
Most people, when they think of bonds or put their money into sort of a plain vanilla bond fund, are tending to get a lot of treasuries, a lot of higher quality corporate bonds, maybe some mortgage-backed securities that are essentially backed by the US government.
And so right now they're not getting a lot on those types of bonds.
Maybe they're getting 2%, 3% return.
But there are other types of bonds.
There are what's known as high-yield bonds, which are more pejoratively known as junk bonds.
And these are issued by companies that have more problems or have more debt, are more likely to default.
And that's the bad part of them, but they do offer higher returns in the neighborhood of...
I mean, right now it's not that high because interest rates are so low, but in the neighborhood of 4% on average.
Yeah, I think the important thing to know with bonds is that even though they have this reputation for safety, you can still see losses for different reasons.
One is what we've talked about in terms of how prices can change.
If interest rates go up, prices of existing bonds go down.
If you time it wrong, you can lose money even in U.S.
treasuries, even in U.S.
government bonds because...
Even though the government is not going to default, the prices of those bonds have gone down because interest rates have gone up.
So that's one thing to keep in mind.
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