How To Buy Corporate Bonds On Fidelity | Bond Investing For Beginners

7.5% investment-grade corporate bonds from Prospect Capital Corporation & how you can buy them (step-by-step) on Fidelity - that's what we'll be talking about in today's video!
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📢 Get 15% off our brand-new bond courses thru 11:59PM ET on 4/30/2024 for Financial Literacy Month - enter coupon code bondfans2024 at checkout - see links below for more details! Bond Beginners (our foundational-level bond course): www.diamondnestegg.com/bond-beginners Bond Masters (our intermediate-level bond course): www.diamondnestegg.com/bond-masters Or get both & save $100: www.diamondnestegg.com/home#_paa2isucf 👉 Join our super-supersaver membership for regular market updates & monthly live member Q&As 👉 kzbin.info/door/nexoc6tvesvcCEzZhmI-Agjoin >>>>>>>>>> WATCH NEXT Our Bond Courses vs KZbin Membership | Which Is Right For You: kzbin.info/www/bejne/fmbLZXivnZWboNE Bond Beginners Course Sneak Peak | I-Bonds vs TIPS: kzbin.info/www/bejne/q4mzq5WgmpaaaKc Bond Masters Course Sneak Peak | How To Build A Bond Ladder: kzbin.info/www/bejne/pmqTenejjdNkb9U >>>>>>>>>> Here is the overview for Bond Beginners: 1. 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[@ScooterOnHisWay2024]

Thank you for speaking slowly and enunciating so clearly in all of your videos. These are not processes that should be rushed through. I appreciate your well articulated step-by-step instructions on this and other processes you have discussed in the past. I say this every time I post on your videos - I have made a lot of money by *paying attention* to the things you discuss in your videos - and by following these step-by-step instructions when acting on my investment decisions. Thank you as always, Jennifer!

[@cookmaster3626]

Your tutorials are great the way you explain in simple and to the point details. Thanks for your great service.

[@kennethreedy5258]

You are among my favorite KZbinrs. Thank you for all you do.

[@Paulschultz-ny6hz]

Thank you again you are a great instructor.

[@deepaksubramony5438]

Locking up money for 10 years in a single BBB- issuer's bond sounds WAY too risky, even with a 7.5% coupon. You can get a higher rate of return for WAY less risk simply by investing in an S&P 500 tracking index fund. Bonds are supposed to be LESS risky than stock funds, not more. If you must buy individual corporates, stick to A and higher. Even better, just buy US treasuries or FDIC-insured brokered CDs.

[@poolmilethirty2859]

Sounds accurate, not to mention less complicated for the novice investor.

[@jdgolf499]

There is nothing wrong with tying some money up into bonds like this, with pretty much guarenteed returns. Yes, generally the s&p would do better, but you have decades, such as the 1970's and 2000's, where the s&p is flat, or slightly negative. With the run it has had the past decade +, I could see another decade of flat to slightly up performance.

[@alicedai98]

It might not tight up the $ for 10 years, if rate drops, company might decide to call the high yield bond in to refinance, if Fed drop rate a few times, you can sell it in open market with profit. The risk is when the company gets lower rating or default or the bond is called and you end up holding cash in low rate environment.

[@g.t.richardson6311]

There is a small place for this in a larger portfolio, but your point is well taken

[@rightangletriangle3188]

I think with the risk/reward with BBB- bond, I would rather own SPY. Bond in my portfolio is supposed to be safe to balance out the risk in stocks.

[@shivamvishnu5539]

Appreciate your videos. One request : Can you walk through what may happen if these corporate bonds default. When, how and will we get our money back? Uncertainty regarding this is what prevents a lot of retail investors in investing directly in investment grade corporates. It seems going with bond mutual fund or etf is always a better option than buying individual corporate bonds.

[@camus83489]

this is super interesting to know too.

[@Dividendflywheel]

Some HERO’s are undercover 😊. I’ve shared this with my brother and friends. Timely tutorial

[@vinceau808]

Thanks for the video! I Jumped in and purchased a small amount of Corporates. Nothing ventured, nothing gained my mother would always say. 😊

[@Scientist538]

so informative, great alpha

[@keithmachado-pp6fv]

Great video as always. I have been going with Agency bonds. 6.5% in 20 year, 6.15% on 5 and 10 year. All callable but YTW is same as YTM as purchased at Par. AAA rated.

[@DiamondNestEgg]

Thanks for sharing! We haven’t found any new issues with good rates that are non-callable currently (for obvious reasons given the market environment right now).

[@ericp1480]

All of my 6%+ agency bonds got called last December. Lessons learned the hard way I guess.

[@keithmachado-pp6fv]

Oh I want it called eventually. I went with ones at least 6 to 12 months from first call date. They are all below par now so guessing next year.

[@poolmilethirty2859]

Thank you, Jenn. As always, a detailed explanation with great visual slides. Is there a video of the index funds you recommend or invest in for buying and leaving long-term for younger folks?

[@DiamondNestEgg]

Not at this point, but we’ll add it on the list!

[@bernardaflores1720]

Interesting video, can you do a Video on How to Read a Prospectus and what items to watch for.

[@poolmilethirty2859]

Good question. Even though she highly recommends reading them, who really reads and understands the myriad + pages?

[@bernardaflores1720]

@@poolmilethirty2859 Does so true

[@joesmith9483]

could you show great munipal bonds to purchase on fidelity??

[@marybk543]

this would be great, and also the best place to keep them/buy them in.

[@joewatts9132]

Very interesting. Interesting company (in what they do) and seems like a good investment (other than the continuously callable component). Right off the bat I wonder how prone this company is calling in their bonds and whatnot. Wondering if that's the "duration" or something else (probably), I could always search. Very thorough description too.

[@youeweu]

PSEC 1Y stock is -21% (1.6M avg vol, 2.25B mkt cap). Does this factor into a decision to buy their bond or not?

[@joewatts9132]

@@youeweu I answered to this earlier but for whatever reason it deletes, I think it was youtube. PSEC hasn't deviated from the single digit price range for a little while (you can see this from the max range on any price chart) but it has gone down steadily from $8.88 or so until now. I'd pay more attention to financials (which I know nothing about), whether they have defaulted on their debt (which I can't remember if this was covered in video, but I know nothing about)...in fact it may be because they have a some what unfavorable rating connected to them that is the reason for the higher risk debt offering, I am not an expert. Remember you aren't buying the stock (but you can use this as a factor) but supplying a company money they will pay you back later and with interest attached. The callable feature gives me pause the most, may not get the full 7.5% before they call it back.

[@Hybridog]

So Fidelity has various money management services. Do they have one that would manage a 100% bond protfolio? And by managed I mean, they make all the decisions as to what is bought and sold, and I would only choose the guiding strategy.

[@johnm8693]

So here's a question...based on info at 11:52 - Why would I be able to BUY a corporate bond like the one in question at my broker but then NOT have it listed on an exchange for potential sale later? Seems like a risky thing to have nothing but a "entrance" at inception but no exit if you'd like to sell in the future.

[@WeibenWang]

I think understood everything except “…and will not be listed on any exchange, which may negatively impact its liquidity…” Why not? What does that mean? Can it be traded on the secondary market?

[@whistlebloer8254]

With limited liquidity, this is probably more suitable for people who are actually prepared to tie up the funds for 10 years.

[@alicedai98]

I just sold two of mine 2026 bond from the same company in Fidelity within one day, pricing has to be competitive.

[@billl1127]

If I decide to sell the bond prior to maturity, will it sell as easily as an equity?

[@yuriw777]

Will you do the same for Schwab?

[@DiamondNestEgg]

It’s on the list!

[@johnsad5969]

Quick question: I bought I bond in September 2022. Would I still get the same rate of return for the next 6 months as of a new I bond buyer ? thank you for your help always .

[@poolmilethirty2859]

Nope

[@jbro6236]

PSEC is a solid company. Thanks for bringing this offer to our attention.

[@jbro6236]

@@variousstuff6469 because they are loaning that out for more, duh!

[@PhilTomson]

That part at 11:50: "And will not be listed on any exchange" that was kind of a record scratch moment. How can we tell if a bond will or will not be listed on exchanges?

[@johnm8693]

My question exactly...Sounds like all the benefits and optionality accrue to the issuer and not the investor

[@k.6160]

Wow, there's a lot to that.

[@dbest4755]

Jennifer - need baby steps to buy bonds in Vanguard.

[@DiamondNestEgg]

It’s on the list!

[@dbest4755]

@@DiamondNestEgg OK I'm waiting...

[@eliseleblanc740]

I wish in real life when I accomplished something confetti would fall.

[@g.t.richardson6311]

I’ll hope it works out for you

[@clifftanch]

Could you explain how to do this on Schwab?

[@DiamondNestEgg]

Stay tuned!

[@r3vo_fastskin]

Are corporate bonds guaranteed by a regulating body like fdic/sipc?

[@pdouglas3866]

No.

[@r3vo_fastskin]

@@pdouglas3866 thanks for reply

[@fan-om4vo]

any bond ETF can offer similar yield?

[@bernardaflores1720]

ETF's no maturity so price fluctuates a lot more

[@pware9643]

IBHH is a corp bond fund with a 2028 maturity and will liquidate then .

[@jamespier7801]

why would someone do that?

[@johnsmith-dm2tq]

what percent of all bbb- bonds fail....??.Historically, investment-grade bonds witness a low default rate compared to non-investment grade bonds. For example, S&P Global reported that the highest one-year default rate for AAA, AA, A, and BBB-rated bonds (investment-grade bonds) were 0%, 0.38%, 0.39%, and 1.02%, respectively. what happens when a bond fails??

[@sonjasssggg4575]

Jen has a great table in one of her videos on bonds that has all the info you might want.. rate of defaul on credit ratingt vs time of the life of bond... I cant remember the video title ( maybe about a year or so ago) but maybe someone can link it if they know which video it is.

[@greganderson4476]

Maybe a dumb question, why not just buy stock in the company and get a 13% dividend?

[@sonjasssggg4575]

Wow.. they really pay 13% dividends!Anyway, Food for thought:..., Bond holders are more likely to recover more of of their investment money in the hierarchy of bankruptcy proceedings as compared to the stock holders. Its all about the risk I guess.

[@user-mt5uu4pz4j]

Stock price fluctuate. Usually, when the dividend % is very high, it means the company isn't doing good. For a single company dividend that gives 13%, the only type I can think of are REITs which have been tanking for the past 2 years. If you're interested in dividends, check out SCHD. It gives a 3.5% dividend rate and has very solid companies in its holdings

[@stanbecks1097]

BONDS? What happened to treasury's for us much older folks?

[@stanbecks1097]

If you live in n.y., state tax free and they are as liquid as t bills ,show me, @@salvaje20

[@sonjasssggg4575]

Agency bonds (10-20 yrs) are a bit higher than T-bills but not as high as the corporate bond she was talking about in the video..And they have a better credit rating than that corporate bond but they are still callable..

[@cedarxeda2665]

7.5% for 10 years tenure????? Is that what I heard?

[@wendyluo-elliott9411]

I promise you it will be called

[@sonjasssggg4575]

Just my opinion,,: It will probably be called, but on the good side you will get a pretty good interest rate till then....better rate than a 26 week TBill . And another consideration is, since it is barely investment grade (thus the high rate of 7.5%) if it is called, then there is less risk long term. Just remember that callable bonds Benefit the issuer, Not the investor... if rates drop, the issuer can call and reissue new bonds at a lower rate and you'llhave to find another place to put your money. But if they go up, they will keep your money on the hook so you can't get the higher rate elsewhere. It's a win_win for them. But 7.5% is a good rate if you can tolerate the risks...credit rating, long and short term, etc.

[@DiamondNestEgg]

@sonjasssggg4575 I see you’ve been watching our callable bond videos :-) Jennifer