Bond ETFs won’t make you rich but they will protect your money and produce the cash you need. I’ll show you five to watch right now! Want safety AND higher cash flow? Check out the real estate stock every investor should own!
Don’t think bonds deserve a place in your portfolio? What if I could show you how to get twice the dividend yield on half the risk compared to stocks. Better still, what if by adding a bond ETF to your portfolio along with stocks and real estate, you could have beat the market this year with less volatility?
That’s the power of bonds. They’re not going to make your rich but will protect you and provide income when stocks fall apart. Even on higher interest rates this year, my favorite bond fund has provided a dividend yield more than twice what you get from stocks!
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Bonds are a loan to the company. They pay interest twice a year and then return the loan value at the end of the bond’s life. That means companies legally have to pay back their bonds plus the interest. Stockholders only get a return and dividends as long as the company can produce profits and stay in business but bondholders have that higher right to assets. The interest rate or yield on bonds is largely determined by the company’s credit rating, a scale of how financially stable the company’s financials are and how likely it is to pay the debt back. Higher risk equals a lower rating and a higher interest rate on the bonds.
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The five bond funds I’ll highlight today outperformed while paying more than twice the dividend yield and at half the risk of stocks. Bond funds offer an easy and cheap way to invest in bonds, usually holding thousands of individual bonds in a single fund. Investing directly in each bond usually isn’t cost effective for investors because you pay a commission on each bond and don’t get the diversification you need.
0:00 Bond ETFs for Safety Investments in a Crash
1:10 A High Yield Bond Fund for Higher Cash Flow
1:36 What are Bonds?
3:39 Are Bonds a Good Investment?
4:38 Unloved Bonds with Upside Potential
6:03 The Highest Dividend Bond ETF
7:09 How to Invest in Bond ETFs
8:20 A Bond Fund for Super Income
10:06 My Favorite Bond ETF to Buy Now
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Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through debt payoff strategies, investing and ways to save more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps….(read more)
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Investing in bond ETFs can be an excellent way to diversify your portfolio, hedge against market volatility, and generate steady income. However, with so many options available, it can be challenging to determine which bond ETF is the most suitable for you.
If you are looking for a bond ETF that offers high-quality exposure to the fixed-income market, then you should consider investing in the iShares Core U.S. Aggregate Bond ETF (AGG).
AGG is the largest bond ETF with assets under management of over $78 billion, and it tracks the Bloomberg Barclays U.S. Aggregate Bond Index. The fund invests in a diverse mix of investment-grade bonds, including U.S. Treasuries, mortgage-backed securities, and corporate bonds.
One of the biggest advantages of investing in AGG is its diversification. The fund invests in over 9,000 individual securities, spanning multiple sectors and maturities. This diversification helps to reduce risk and volatility, making AGG a suitable investment option for both conservative and risk-seeking investors.
Another advantage of investing in AGG is its low expense ratio. With an expense ratio of 0.04%, AGG is one of the cheapest bond ETFs in the market, making it an excellent choice for cost-conscious investors who want to maximize their returns.
AGG also offers a competitive yield, with a current yield of around 2.2%. While this yield might not seem high compared to other, more risky investment options, such as stocks, it is significant for a fixed-income ETF with a low-risk profile.
Moreover, AGG has a robust track record, delivering solid returns over the years. Since its inception in 2003, the fund has produced an average annual return of around 4%, which is consistent with the performance of the bond market overall.
In conclusion, AGG is an excellent bond ETF that provides investors with exposure to the fixed-income market, while offering diversification, low costs, and competitive yields. If you are looking to invest in a bond ETF, AGG should be on top of your list.
No TLT? All of these bond funds crashed during Covid. TLT did not
How would you stack BKLN to SRLN?
Thank you!
Ok so I’m having a problem with the iShares 0-5 Year TIPS (STIP). How is this stock have a 30 Day Yield of -2.03 (NEGATIVE!) as of March 2023 when it’s one of the highest inflation years since the 80’s AND the TIPS have a built in “protection” feature of paying interstate increases after bought?
How is the $STIP paying a 30 Day Yield of -2.03??
Could you do a video on making a t bill ladder? Also thoughts on GTP chat?
Don't you think a better way to go is to buy a fund that holds all the bonds to a certain maturity date ? This way you don't have the interest rate pressure. The funds closes on that date and your guaranteed all your money back. Open bond funds hold too many bonds with no true maturity date.
What about TLTW? 15 percent Div! I like the idea of a bond ETF. I have JEPI, JEPQ and BSTZ. Paying my house payment with the dividends!
Thank you. Just what I needed to watch. My wife and I are directors of our own business and own a few property, plus other income . I am nearly 52, We have started to save to retire perfectly, and possibly live on rental income, I'd really appreciate you go LIVE and talk about how to earn passive income online and retire comfortably.
thanks for all these free information !
Nice vid. Semper Fi Devil dawg
<Ich bin froh, dass ich damals in Krypto eingestiegen bin, weil es für mich finanziell ein Wendepunkt war und bisher meine beste Entscheidung war
Duhhh….anything will beat the market this year….average person did worst than DJIA, which was bearish .
good video but you didn't talk about expense ration which is one important factor
Hello Joe, Great video as usual, Thanks. I just have one important question is the yield quoted on an ETF net or gross of it's expense ratio? This is important given that a lot of pensions over in Europe have a minimium 4% per year drawdown clause.
Sorry Joe, but SCHP (passive) is better for TIPS, and DBND (active) is better than any of that other crap. People who were buying bonds when the 10 year was bid up so high that it only yielded 50 basis points were just asking to get burned. A lazy person might just buy Vanguard Wellington, and let Wellington Capital Management do the work for them.
Great video!! Have you reviewed tltw?
FLBL is better than BKLN
I like math nerd shit lol. Make the math nerd shit, I'll watch.
3 months ago was a great time to invest in TLT
Not sure if an ETF like JEPI would ultimately be a better option for passive income, higher yield but taxed. Will need passive income for retirement in approximately 3-4 years from now.
just what i needed – thx!!
You can get 4% on T Bills right now risk free
Mate-Senior Loans are NOT comparable to Bonds. They are floating rates instruments and in a sigificantly more secure part of the capital structure….
Some of The expense ratios seem awfully high for a bond fund.
The price action is concerning on the ETF it has only gone down since 2014. At what point do you take that into account? Assuming the price doesn't fall 7% YOY you're probably good but is this closed ended?
VTIP pays a higher percent dividend than TIP, and it has a lower price decline YTD as well!
Whats your thoughts on BNDX ? Vanguard international bond ETF.
hI Joe, a lot of excellent content here, thank you. Which video would provide the overall best paying dividend stocks
Uso
James Bond 007
Are these monthly or yearly yearly is useless
I Will forever appreciate this channel, you've helped me and my family a lot, your videos. And advice are inspiration and helpful to us. Anyone who is not investing now is missing a tremendous opportunity "imagine I invested $1000 with the lady you recommend some time ago and got the profit of $10,300 in 4days, Gabriella Arthur is the best.
What are the benefits with bonds over term deposits? Currently you can get about 4% return with Australias big 4 and it's 100% secure (up to $250k by the Au government). Sure it's locked in for the term but i always wonder why some people take up bonds with lower returns instead?? Thanks for the video (still going through it).
Does anyone know where you can buy these in the UK?
Bonds are a ballast against the volatility of stocks. Safety and security are my criteria. Only high-quality treasury and municipal bonds meet those requirements. No corporate bonds for me.
Great video, thanks Joseph. My choice is clear, why would anybody under the current inflation consider any other bond ETF than TIP? It has very little risk, it pays 6%, the highest of the bunch, and if inflation continues its upward trend, TIP will pay more. Would inflation continue? Nobody can be 100% sure, but there is an important consideration that favor higher inflation. The monetary policy is tightening, but the fiscal one continues to be loose with no abate. This collision only favor higher inflation.
Bonds have been falling just as much as SP500, why do you say they provide safety???