What is a swap? - MoneyWeek Investment Tutorials

Tim Bennett explains how an interest rate swap works - and the implications for investors.
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[@kortyEdna825]

I was advised to diversify my portfolio among several assets such as stocks and bonds since this can protect my inherited portfolio of about $2.5m. I’m used to just buying and holding assets which doesn’t seem applicable to the current rollercoaster market plus inflation is catching up with my portfolio. I’m really worried about survival after retirement.

[@carssimplified2195]

True, I mostly just buy and hold stocks, but my portfolio has been mostly in the red for quite awhile now. Unfortunately to be able to make good gains, you’ll need to be consistent and restructure your portfolio frequently.

[@brucemichelle5689.]

It's often true that people underestimate the importance of financial advisors until they feel the negative effects of emotional decision-making. I remember a few summers ago, after a tough divorce, when I needed a boost for my struggling business. I researched and found a licensed advisor who diligently helped grow my reserves despite inflation. Consequently, my reserves increased from $275k to around $750k.

[@PatrickFitzgerald-cx6io]

My partner’s been considering going the same route, could you share more info please on the advisor that guides you?

[@brucemichelle5689.]

There are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Colleen Rose Mccaffery” for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look-her up.

[@PatrickFitzgerald-cx6io]

Thanks a lot for this suggestion. I needed this myself, I looked her up, and I have sent her an email. I hope she gets back to me soon.

[@roydenpereira5726]

To explain something like this in a way that someone new can understand is really admirable.

[@kelliezhang6750]

Exactly!

[@bdsheiladiaz]

Indeed! 😍

[@liujasmine8392]

Totally! I think I got it

[@nickmhc]

He’s the best

[@sknasir2280]

@@kelliezhang6750 O

[@akhilesh718]

Best explanation of SWAPS I have ever seen

[@AlzubairAlsenani]

I watched a 2 hours lecture twice just to know and understand how swap works, but I got nothing. I watched this 15 minutes video only once and I got the whole idea. Very grateful

[@vunguyenchannel]

Same , my teacher is so bad

[@markchannel9962]

We need to bring this guy out of fucking retirement and make him a fucking national treasure

[@juanrave7864]

Mark Channel c

[@JoeBlo2]

This man is a pedagogical wizard. Shame he stopped making videos.

[@markizmendez6431]

Did he really stop?

[@fahadus]

Thanks Dustin!

[@rachnana9904]

@Dustin Suryadi Thank you for the info!!!

[@bassmanjordan1139]

He's doing vids on killik and co's channel now.

[@ronj5407]

follow his blog 'moneyweek.com'

[@abdulnoahmansaray383]

This concept was real hard to grasp. This video made it look easy. You are a good teacher.

[@winsterrox5913]

I am studying for an exam right now, and this has come in really handy. I really could not understand the concept of interest rate swaps earlier from text books and you really explained it in such an easy manner. I am so stunned and genuinely happy that I now understand this concept. Thank you. Thank you so much for explaining it in such an easy to understand way🥰

[@ronj5407]

You just explained one of the most complicated practice in finance in the easiest way possible. Great job!!

[@felixlagemann8109]

This guy is for some reason hilarious, yet such a great teacher! thumbs up all day every day.

[@riddhikulkarni1802]

This is one of the best videos on SWAPs you could ever come across. Thank you for coming up with such a brilliant video Sir.

[@sharonpan9714]

I can't say how appreciate I am. This video gives me the feeling that "that's what swap is about!!!" how amazing! Thank you so much.

[@chachachalek]

Better and clearer explanation than a whole 3 hr class with my professor

[@mutlugundiler4458]

He is great. Why did he stopped making videos? How can we get him back to teaching.

[@PRiiSCiiLLA8]

this is brilliant content - I was never confident with explaining what swaps are and now I feel like I could confidently go into my interview to explain! thank you so much!!

[@g1kluang]

i would have aced my economics if this guy thought me!

[@KingTheRat]

JeevS GOne Still fail your spelling test though

[@MrSupernova111]

Extremely well explained! I kept asking where the original loans were coming from to better understand why the two companies need to enter into a swap agreement. You're video is the only I could find that answers my question. Thank you!

[@eraniklihsuk]

He has explained a difficult and complicated topic in a simple, objective manner. Best explanation I have ever seen.

[@FHIPrincePeter]

A very good and clear explanation of an OTC swap. No long winded introductions simply concise and to the point.

[@romanarashid5590]

Thank you very much.I couldn't understand this for many time.But now it's crystal clear.Thanks again.You have made my day.

[@Chloe94169]

YOU ARE A.M.A.Z.I.N.G. saved my life preparing for the final exam!! this is the BEST explanation EVER!!!

[@siddharthmudaliar9187]

Sir, I just learned the the Interest Swap and taught it to 7 colleagues through class room training. Once again Thanks a lot. I have been assigned a new Project - Canara Bank Derivatives where the implementation is going on. Your understanding way and constructing the sentences wisely helped to understand the concept/functionality.

[@Alfy47]

What a lucid and understandable explanation of a swap. Why did he stopped posting his tutorials and sharing his knowledge ? Anyway, my thanks to him.

[@mthokozisimbambo2831]

This video has clarified swaps and relieved me of pre-exam stress and anxiety. thank you TIM

[@nalin7863]

No one could have explained it better. The way you teach is amazing. Thank you, sir :)

[@vanessabratosin6497]

The best explanation on IR Swaps I've ever heard! Thanks!

[@ripunjaya]

This is the best video on swaps that explains the basic concepts extremely well

[@preetishgungabissoon1761]

My lecturer explained this and nobody understood anything but here everything is clear. Great job!

[@tramdhan111]

your explanation is really.. really much more clear than what the professor gave in the class... THANK YOU..!!

[@Davi_uk]

You make a strong difference to many. BEST TEACHER EVER!!! Thank you so much!

[@xevious2864]

In my 4 years of business school this is the best display of teaching I have ever seen; this man should be a finance professor making six figures.

[@liujasmine8392]

You explained the hard finance concept in a so vivid and gentle way~~ I think I really got the business model of a swap bank Making money by offering better financial deal to clients! It’s really the magic of finance

[@MoneyWeekVideos]

Tommas099 - thanks for your comments. In fairness the example is designed to show a beginner the basic principles of a swap. All my numbers show is that a swaps bank can take advantage of the fact that different firms are able to borrow on different terms - my example is 100% theoretically sound but I accept the figures used are (quite deliberately) unrealistic in the I/R swaps market as I wanted to keep the basic principles as clear as possible. Tim.

[@skinnyDH]

0:51 As I type this on 02/11/2017, it only took the BOE another 6 and a bit years to finally do the rate hike haha.

[@nouranshehata4311]

You are probably the only reason I now have a better chance at passing my final on Tuesday.

[@amymar771]

This is the best explanation ever for newbie, if you know absolutely nothing about swap or are confused. He really explained it as you were a five year old which is something I wanted lol

[@maciej5264]

You kept me fully interested until the end. You enlightened me in a moment when you said it is financial magic. It is the simplest and straight to the point IRS explanation I've ever found.

[@marloncampbell4537]

After watching many videos on this topic, your explanation has made me finally have an understanding of this topic. Thanks a million Sir.😊

[@Ateelol]

I am an engineer undergraduate and just wanted to inform you that your new job is to teach me all the terms that are flying around in financial movies. Thank you for that, keep the good work up :)

[@adhambashir]

I love your videos Tim, very well thought out and presented clearly. Thank you!

[@dijital.binali]

Thanks man. This video really helped me understand the basics of swaps. It even helped more than an hour of reading.

[@lynnn9154]

Best explanation for SWAPS! TYVM!

[@vivat_in_aeternum7721]

I'm not even a native English speaker and this explanation is the best available on KZbin

[@siddharthmudaliar9187]

The best Interset SWAP learning VIDEO ever.

[@SmartKidLol]

I spent three hours on my lecture notes but i still can't understand the concept of 'swap'. Your video helps me a lot. Thank you!!! :D

[@johnessien2167]

Why has no textbook ever thought to explain it this way? We spend hard-earned money buying books that intentionally obfuscate things and leave the reader more confused than they were before reading them. Thanks so much Tim Bennett for making this rocket science of a concept feel like ABC. I must confess for a moment there I was checking the comment section expecting to see people who understood swaps screaming about how wrong his explanation was because, by Jove, there's no way this concept could be this simple. From the comments so far, I can now fully accept Tim's explanatory genius. Again, thanks Tim.

[@yitingjin2354]

Thank you so much for making swaps so easy to learn!!! Thanks a lot!!! Better than going to my lectures actually!!!

[@yves5445]

fantastic, you really did a great job explaining this in such an understandable way, didnt even had to pauze or replay it. well done!

[@tg3470]

This guy explains these topics in a matter that is very easy to understand. Thank you sir.

[@aisyrinjanita3220]

Such a great video. Very simple to understand. Get yourself prepared for the upcoming CFA exam, guys. Good luck!

[@MargoSengupta]

You are AWESOME! I was looking over my boyfriend's shoulder and asked what a swap was and he didn't feel like explaining. So I watched this and now I'm talking to him about LIBOR and shit. THANK YOU

[@riddle1187]

This was very helpful in understanding a rather complicated concept. Thank you!

[@pragyaverma9665]

Thank you for all the knowledge that you have imparted with such ease of understanding. I am a fan of all your work ! :)

[@melanies2849]

That was awesome! So clear cut! I am better prepared for my final now! Thank you :D

[@user-nu7zo7qs6s]

Learning for my state exams - Mr.Bennett you are saving me this week!

[@grimawormtongue1949]

I think it helps when trying to understand this to consider things from the perspective of the swaps bank. It gets together with the companies, asks them what they are offered, and notices that the overall amount of interest for them to pay would be less if they were both to go for the rate they would prefer not to go for. This becomes obvious when you see that the total amount of interest paid to the banks when each company goes with its initial intention: 5M((libor for A) + (10% for B) = libor+10%), is greater than the amount for the opposite situation 5M((7% for A) + (libor+1 for B) = libor+8%). It sees that there is money to be saved. Therefore it then recommends that the companies pursue the borrowing option which is opposite to their intention with respect to banks A and B with the assurance that, through the swapping they'll do with the swaps bank, they will in fact end up paying a fixed or variable amount in accordance with their initial intention. Some of the saving will be kept by the companies, and the rest will be appropriated by the swaps bank.

[@schulden93]

Thank you! Great video, I wish my professors were that good!

[@lulusebola8090]

I finally understand this concept! Thank you.

[@Yashad1000]

Explained in a very concise and accurate manner...! Perfectly understood d swaps.. Thank you very much..!

[@wenjessi]

Finally understand “swap” 😀 Thanks!

[@willyoctavianus8691]

What an educator you are, Sir! Salute

[@GiteshBajaj]

This video is great... it explains swaps very clearly.... THANKS

[@JMan730]

I'm learning a LOT from your videos - they're very clear - thanks!

[@siddhantgala7461]

Amazing explanation. No text book has cleared my concepts like this video. Keep it up and thank you :D

[@meenakshiuk6965]

The most easiest explanation on swaps. Amazing

[@larryporter3744]

YOU DO A WELL JOB OF EXPLAINING!

[@GSCSoftware]

Thanks for explaining this in a really clear way, great video!

[@MrRedhotchili21]

I wish I would've watched this during my Money and Banking Class last semester. It would've saved me a great big headache trying to piece this together off my professors lectures.

[@GanjaPharmzor]

I can't possible grasp the fact that anyone could come up with this.. Really ingenious stuff!

[@caipatrick6866]

Thank you sir! Your explanation is simple and easy to understand!

[@imfallingooo]

thank you!!!! greatest and easiest explanation to understand in the entire internet!!!

[@kpchuah]

Crystal clear information, thank you

[@agnax222]

Thank you very much for you video, I learn much more from your vid than in my classroom.Please keep up the awesome works!!!

[@makpae007]

Outstanding explanation! You make it look so simple.

[@janettemurillo9357]

Thanks for the explanation. Your videos are a great help. The way you explain and use explamples in your videos are so great. it makes such enjoyable to watch it and learnt it. Thank you so much.

[@HaveAGreenDay95]

This really helped me study for my FRM exam tomorrow!

[@yingwang7084]

Man, i know only the basic of finance, but i think i understand most of the video. Thanks.

[@DylanBasu]

Thank you very much for explaining a swap. Was feeling very grateful for this video. Good job!

[@theolukonde2326]

This is brilliant, thank you for simplifying this topic for me.

[@shaswatmohanty7907]

Amazingly explained the concept of SWAPS using perfect example. Thanks :-)

[@MoneyWeekVideos]

Actually I might do a basic currency swap soon. Caps floors and collars are interesting too but require some background knowledge about options (a cap is just a string of options, as is a floor, with a collar being the two in combination). Thanks for the suggestions. Tim.

[@AltoPianista]

wow...the way you made it look so easy is incredible. Thank you so much !!!!

[@Wayne1517]

This man is an excellent educator.

[@sanjeevsaju1099]

His teaching standard is GOLD!

[@BasementR1]

Thanks a lot Tim ! Couldn't wrap my head around the concept, now I can !

[@shri8203]

Very 1st time i understood about Swaps. Thanks

[@usernameBeatles]

Very clearly illustrated. Love this fella.

[@kingcobra071]

you are genius!!! just loved the video.....easy, simple. thanks.

[@purvakulkarni209]

Thank you so much for this simple and clear explanation.

[@yosefbakali4567]

Thank you for the explanation! Very good quality!

[@jenniferuno]

Really like your video! So clear and easy to understand!Please post more!Thank you!!

[@conniedashiell2656]

Great video! He was clear and got straight to the point. Thank you so much!

[@casperphan8792]

Finance is a magic and this teacher is a magician. So much admire.

[@mangeshshelar7375]

This a simplest and amazing video to understand swap! Thanks

[@kunkro20]

Crisp and clear explanation. Thanks Tim

[@Cnctax]

So easy to understand. Very well done!! Thank you

[@especheg]

this tutorial is amazing, way much better than the explanation of my teacher.... thank u very much MoneyWeeKvideos

[@NidhiKafalia]

awesome explanation. Thanks Sir for such an impeccable video.:)

[@parthibanmanoharan3191]

You are a brilliant teacher. Hat's off.

[@danielrm94]

Thank you! Very useful! Greetings from México!