At first glance, the label ‘junk bond’ appears to look like a warning. “Stay away! This bond is a load of junk!” You might be surprised to hear that junk bonds are actually becoming very popular investments. But, like other risky investments like shares, they’re not suitable for everyone. Definition of a junk bond A junk bond is a type …
What is a Bond Coupon Rate?
When researching bonds, you will notice that each bond will state its coupon rate. Beware the coupon rate Below, I’ll explain exactly what a coupon rate is. But I’ll also explain what it is not. A trap that many new bond investors can fall into is confusing coupon rates with a rate of return. With some investments, such as a …
Definition of Bond (Investor Perspective)
The definition of a bond as an investment is as follows: What is a bond? A bond is an agreement between a borrower and a lender. From an investing perspective, the ‘owner’ of a bond is the person who is entitled to collect the repayment and any interest. This may not be the same person who originally provided the finance …
Is Gold Overpriced & Overvalued?
The price of a troy ounce of gold has moved between $1,000 and $2,000 over the 2010 decade. Is that a fair price for this precious metal, or an unjustifiable premium? ‘Is gold is overpriced / overvalued?’ is a natural question for new investors to ask. Before investing in commodities, it makes sense to understand whether the market is trading …
Is Property A Safe Investment?
How much truth sits behind the common maxim as safe as houses? In investor-speak, a bricks and mortar investment is an opportunity to buy something tangible and real. It signals security and lower risk. But how closely does this reflect reality? Master the basics of property investment This is a companion article to our ‘How to invest in property‘ ultimate …
The Gold Fish Dilemma – Why It’s Impossible to Spot a Successful Fund Manager
In my article Passive funds versus active funds, I explain that the majority of active funds underperform the market. This news might feel very counterintuitive. I was certainly shocked when I first discovered this uncomfortable truth. Perhaps it feels so absurd because the active fund management industry is geared up to provide superior returns: Fund managers pay well and are …
Do landowners own the air above their land?
I’m expanding my popular How to invest in land guide with a series of short articles. Let’s explore some curious questions about investing in land which I couldn’t squeeze into the original article! Question 1: Do landowners own the airspace above their land? “Get off my land!” is a famous phrase, usually bellowed by a farmer holding a shotgun. What about “Get out of my …
What is an Exchange Traded Fund?
Exchange-Traded Funds (or ‘ETFs’ for short), are a popular method for investing in a wide range of asset classes. In the US alone, $4 trillion of assets are now held in ETFs. But what is an ETF and what are the benefits of using an ETF compared to another type of fund? Definition of an ETF An Exchange Traded Fund …
Commodities News and Data Sources
The efficient-market hypothesis may theorise otherwise, but all practitioners understand that performing thorough research will yield better results than picking out commodities investments at random. To support my ultimate guide on How to invest in commodities, I have compiled this shortlist of excellent places to find news and data on the commodities asset class. I will highlight the different sources …
Definition of Stocks and Shares – is there a Difference?
The Stocks and Shares ISA is a tax-free investment account available to UK investors. The name implies that stocks and shares are similar but somehow different. This leads many people to wonder – what is the difference between stocks and shares? Is there a difference at all? Definition of ‘shares’ A stock or share is a certificate which entitles its …
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