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Play in the bond market | yield on bonds

FUTU BULL, as a fairy beast, has seen too many tragic deeds of taking money and losing money to buy and sell. In the bond market, there are also a lot of investment masters who close their eyes and throw money away, relying on "thick family" and casually "doing charity". If they invest, they will slowly lose money.

In view of this, FUTU BULL decided to take up the role of God of Wealth and escort everyone's profits. Today, let's talk about where the bond yield comes from, and here we have to mention the bond yield three swords. —— Interest income, price differentials and reinvestment.


1. Coupon: bonds never bully honest people

From the beginning of the issue, the face value, coupon rate and maturity date of the bond constitute the most basic interest income of the bond.


In general, the higher the coupon, the greater the bond yield, and vice versa.

Friends who are not sensitive to the market, buy bonds and stick to it to the end. If you can't control the situation, don't be lured away by products that seem to yield better.


2. The value of time: the reward of long feeling

The saying "time is money" is that kindergarten children can memorize it, but who really knows the value of time?






In the bond market, the value of time is really reflected in the form of money, the truth is so naked, I wonder if you feel the magic of the capital market.


Yes, ideally, the future income of the bond is roughly determined by the combination of time and coupon. Under other conditions, the longer the duration of the bond held by investors, the greater the yield, and vice versa, the smaller it will be.


3. Low suction and high throwing: an eye-catching price difference

In.“The Bond Price"It is understood that with the reverse relationship between market interest rates and bond prices, the prices of existing bonds fall when market interest rates rise; on the contrary, when market interest rates fall, the prices of existing bonds rise.

If FUTU BULL buys a bond at a low price, the market interest rate falls all the way in the future, and it is lucky to find the receiver to take over at a high price, then the margin (price difference) is the gain. Low absorption and high throwing is the best way to make money.


4. Reinvestment: stop the car! I need to change to the next one.

After the sale of the previous bonds, even with interest to invest a more optimistic bond, is to reinvest.




Every investor has his or her own judgment about asset allocation, and everyone has the right to change cars, but when reinvesting, be sure to keep in mind: Only products with higher coupon rates can bring higher returns. And the door is not only to compare coupon rates can be judged, there are uncontrollable market interest rates, credit risk and other factors, find ways to make you regret.


Conclusion

Interest income, price difference and reinvestment are the three swords who make up the bond income. Furthermore, coupon interest rate, investment time, market interest rate and other factors will affect the return. No matter what investment you make, you can't be too free to do what you want. Interest rates are a double-edged sword that will hurt you at the same time, and time will always be the company of the longest feelings.

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