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@100perdido
Жыл бұрын
Fannie Mae bonds have an "implicit" guarantee. During the financial crisis, Sec.of Treasury Hank Paulson announced that he was prepared to let Fannie Mae bonds default and I sold mine at a loss. What I didn't know was that Hank was telling hedge fund managers the opposite so some hedge fund out there bought my bonds cheap. But as they say, "it's a really big club but you ain't in it". Thanks, Hank.
@WallaceBMcClure
Жыл бұрын
Now I understand why Paulson is so hated. He’s presented as a smart nice guy in the documentaries. I thought that was fluff, now I get it. I don’t remember him saying that he would let Fannie Mae bonds fail, but I’m sure that there are lots of things I don’t remember.
@jeremiahmiller4640
11 ай бұрын
Would you ever buy agency bonds now?
@michaelself5185
10 ай бұрын
The financial calamity of letting Fannie Mae or Farmers default really cannot be understated. You want another great depression? Thats how we'd get there.
@Rudy1150
Жыл бұрын
I have never thought I would have such a different short term vs long term strategy for investing like I am doing now. Started with the I-bonds, then moved to t-bills, and now looking to move a portion to something with a bit more risk. Understanding these basic concepts has been very profitable. When i have showed friends how to invest with these they are kinda shocked how poorly the websites are designed and how it is needlessly confusing. Thank you for making this make sense to all of us.
@WallaceBMcClure
Жыл бұрын
Same
@williammathis6044
Жыл бұрын
Yep. She has been a Godsend to normies like me
@keithmachado-pp6fv
3 ай бұрын
One word of caution on agency bonds and I assume other secondary market bonds as well. Keep an eye on the settlement date. The YTW listed is based on the settlement date. I bought an agency bond in late April that must have been a new issue as it didn’t settle until Mid May. It had a YTW/YTC of 6.5% and got called effective June 7th. So they had my money for 6 weeks but only paying interest for 3 weeks so I am getting 3% not 6.5%.
@S.A.1
Жыл бұрын
Thank you for educating us with each and every video! I always learn something new here.
@jackyeh7512
Жыл бұрын
I bought $5k at 6.22% and $15k at 6.33% last month, both callable in 09/2023 and mature in June 2033. Vanguard charged $5 and $15 fees respectively. I was surprised to find that the value drops quite a bit if you try to sell and very hard to buy more to take advantage of others loss. I would not buy again just for a little higher interest,
@DiamondNestEgg
Жыл бұрын
Thanks for the insights Jack
@Trust_but_Verify
Жыл бұрын
If the interest rate goes higher, your bond value will drop. Wouldn't the 10 year treasury also drop in value if you were trying to sell it after you bought? Fidelity doesn't charge buying these bonds. I don't know what you mean about "very hard to buy more".
@jackyeh7512
Жыл бұрын
@@Trust_but_Verify I bought this bond (3133EPMD4) "FEDL FARM CREDIT BANK BOND 6.33% 06/07/38 06/07/23" in June 05 and costed me $99.90 per unit. Today, 07/11/2023, to buy the same bond will cost $100.050 and to sell will get only $99.067. I cannot find any angecy bonds higher than 6.33% rate today. Why is the selling price lower than the price I bought? And why the spread is so wide (100.05-99.067 = $0.983)? I will love to buy more at $99.067 but I can't.
@jackyeh7512
Жыл бұрын
@@DiamondNestEgg I love your video. Great job!
@BorisLikesBonds
Жыл бұрын
Thanks for the video, Jennifer! This is a great compliment to your 'Member's Only' video. The high minimum investment is an insurmountable obstacle for me right now. Add to that the callability and the marginal increase in yield ... I'm sticking to Treasuries. A 52-week T-Bill is coming out this week and both of my palms are itchy! 😀
@DiamondNestEgg
Жыл бұрын
Thanks for sharing Boris
@mmane257
Жыл бұрын
your information is very valuable to us small investors. thank you so much 👍🏿
@giovannidepetris6335
Жыл бұрын
The best channel ever! Thank you intrigued by agency bonds keep explainig and anayzing them! thank you
@mrfudd13
Жыл бұрын
Thank you. I've stayed away from bonds till now, but this helps me clearly understand how to approach.
@DiamondNestEgg
Жыл бұрын
Glad it was helpful
@S.A.1
Жыл бұрын
Came back here to let you know, because of you I finally got my toes wet with Agency bonds for 6.3% yield. (Of course callable, but I really needed to buy to understand these better). Thanks Jen!
@DiamondNestEgg
Жыл бұрын
Glad our agency bond videos are helpful!
@racerxkx2
Жыл бұрын
Does anyone know how you can get alerted on new issue agency bonds specifically FHLB, FFCB, and TVA? (Brokers I use only have general new issue alerts which would alert me almost everyday.)
@Kecarter1
Жыл бұрын
Thank you thank you. The first slide helped break it down nicely.
@synaspora
Жыл бұрын
Question on buying agency bonds on the secondary market: I'm not familiar with what bid/ask spreads I should expect, so how do I know when I should accept the ask price or offer a lower bid price? 🤔
@jackyeh7512
Жыл бұрын
You might need to buy a high minimum, say $50k +, just to qualify. You might need to take some loss when you try to sell.
@jimroberts6176
Жыл бұрын
Another good video, Jen. I saw the Fidelity tutorial. Did you also do one for Vanguard? Don't see it on your site (?)
@DiamondNestEgg
Жыл бұрын
Vanguard doesn’t offer new issues but we plan on doing one soon anyway for the secondary market
@nickwalsh527
Жыл бұрын
Hi there - your chart identifies TVA as an Agency rather than a GSE but also says that the US Govt guaranatee is implict rather than explicit. Is this correct? Thank you for all your informative videos which I find very useful.
@danielmcgowan113
Жыл бұрын
Thanks for another informative video. Given that rates are likely to increase, I'm happy to stick with shorter term T-Bills.
@DiamondNestEgg
Жыл бұрын
Thanks for sharing Daniel
@ronloftis9080
Жыл бұрын
Don't necessarily go for the bonds with the highest interest rates. I have gone out from 5 to 7 and as far as 10 years last Oct/Nov 2022. I have had several of them called. So they were a nice 6.5% 6 month investment. Just be warned, at these higher interest rates, the call rate has increased.
@DiamondNestEgg
Жыл бұрын
Thanks for sharing
@grnt1976
Жыл бұрын
15 year 6.4% callable Farm Loans are available now. on Fidelity I'm pretty sure they'll be called within 2 years, but seems like a good deal vs current 12 month... We'll see. $200K bought makes that $1067 per month in interest payments. Ride the train as long as it runs.
@DiamondNestEgg
Жыл бұрын
Thanks for sharing
@alexmarquez4187
4 ай бұрын
@@DiamondNestEgg Similar thought process....ive bought bunch of zero's across 3/6/9 months averaging ~5.3% and now seeing 100bps higher on 2yr GSEs. assuming no "real" risk difference (have GSE's ever defaulted historically?) and i dont need access to the cash, i hold paper to maturity, why arent more people accumulating GSE's at 5.74% 2yr vs 2yr treasuries a full 100bps lower, even if the GSE is Callable and taking the monthly int payment? even if Called, i get my principle back, keep the int payments, and reallocate to equities. so im curiously perplexed even though the comment/summary at 9:08 sum it up well.
@dfwyuvera
Жыл бұрын
Thanks a lot. Learned new knowledge
@bigstar111
Жыл бұрын
Thank you for sharing this info!
@BY-ni6yk
Жыл бұрын
Very good content! How about the BBB corporate bond, which has the highest yield on the chart?
@DiamondNestEgg
Жыл бұрын
The chart in the video is for agency bonds. We'll be covering corporates separately - stay tuned!
@michaeljin2789
Жыл бұрын
Thanks for this video, was trying to ask questions for Agency/GSEs when check Fidelity, and ~duang~ the video is here... BTW, seems only Fidelity has auto-rollover "AR" for those T-Bills, again, Thanks Jennifer for those info/videos
@dogiego
Жыл бұрын
so does schwab
@jimarnold4252
Жыл бұрын
But not Vanguard
@johnm8693
Жыл бұрын
I'm of the mind that we're closer to a Fed pivot than more rate hikes so I decided to pick up some 6% agency debt with idea that they will likely find some capital gains as the Fed backs off on rates. I'd likely sell the bonds for the gain and then step aside for the next hiking cycle.
@johnm8693
Жыл бұрын
Thankfully I do not have a call date until July 24 so I do think there is opportunity for some gain. You point is well taken.
@linneisenhower2571
Жыл бұрын
Before rates started heading toward zero years ago, I held GSEs yielding about 4%. They were all called away quickly as yields went down, as expected. I’m not aware of any non-callable GSEs. Are there any ?
@DiamondNestEgg
Жыл бұрын
All the new issue ones I’ve seen recently are callable
@JPSinvestincts
Жыл бұрын
Thank you for such an informative and easy to understand review of Agency bonds. I have been interested in them for the past few months, but have found little information available on how a retail investor can add them to their fixed income strategies, aside from just buying an ETF like VMBS. My question concerns how to select the interest rate and duration of an agency bond that seems least likely to be called. I keep hearing how the majority of mortages (as much as 70%) are held at rates lower than 4% right now. Assuming rates will be peaking soon, should an investor in MBS and GSE perhaps target something lower than the highest rate offered right now, when factoring in the refinancing risk most likely to come in the next couple of years? Thanks again for all that you do!
@ninim8118
Жыл бұрын
lets assume you are looking to buy a callable bond and hold for 10 years, lets assume the rate is around 5%, find a bond with the lowest coupon from secondary market, lets assume the coupon is 2%, this makes the value of the bond lower than face value, may be $800 instead of the face value of 1000, this will give a bond that most likely won't be called until rates are below 2% and it will give you total return of 5% annually for the next 10 yrs. ( 2% coupon + Bond value appreciation)
@JPSinvestincts
Жыл бұрын
@@ninim8118 Thanks for your reply. Yes, I understand that idea of buying below par and holding to maturity to eventually get that 5% yield, with the likelihood of it getting called with a 2% coupon being low. Selecting a low coupon is definitely the safest way to avoid them getting called, however, I'm hoping to find a higher coupon in the "sweet spot" with a lower probability of getting called so that I can collect a higher coupon now. After reading some interest rate predictions from Morningstar, they are predicting the 30-yr fixed mortage rate to be at 4% in 2025. So my strategy for selecting an Agency bond is built on the idea that folks will not refinance until the rates fall at least 1%+, or otherwise it's not really that advantageous to the borrower. Then, I took the current mortgage rate 6.75-7%, added it to the 4% prediction, and then divided it by 2 to arrive at 5.375% for my "sweet spot." Arriving at that figure, I decided to go with CUSIP 3134GX-2X-1, Federal Home Loan Mtg Corp Maturity 9-30-27 with 5% coupon, for a price of $99.12 as my first agency bond purchase. I'm a complete novice here, and realize my strategy is not a science, but just a concept I used to justify my judgement (which may be completely wrong). Worst case scenario: it gets called and I still collect a coupon with a higher spread over the 5-Yr Treasury Note right now, and then just have to reinvest later. I do like your idea of buying the lower coupon bond though...seems like a great way to lock in a higher yield in the end. Thanks for your reply!
@eliseleblanc740
Жыл бұрын
I’ve invested a small portion of my fixed income portfolio in agency bonds for years. I own some individual bonds that had the $1k minimum for new issues and also hold the iShares GNMA ETF since the individual bonds have the 25k minimum.
@DiamondNestEgg
Жыл бұрын
Thanks for sharing Elise
@trigger2142
Жыл бұрын
If I buy them in my taxable IRA account, do I care if they are state or local taxes?
@rosenasser5943
Жыл бұрын
Well I wish agency bonds were call protected. That would be nice!
@DiamondNestEgg
Жыл бұрын
I don’t think you’re the only one Rose!
@brandonhunziker9686
Жыл бұрын
Do you have any sense of how often agency bonds are called when rates are trending lower?
@ATHJD07
9 ай бұрын
Looks like I'm going to find out what happens when an Agency Bonds gets called before the first interest payment date. Just got notice from Fidelity that the two bonds I have with FFCB are going to be called
@DiamondNestEgg
9 ай бұрын
Thanks for sharing Anne - let us know how it goes!
@bobbenavides
Жыл бұрын
I got my first GSE from the Fidelity website this week. Can you compare CDs, Agency Bonds, with those fixed annuities? I can get 4.85% with jumbo.
@DiamondNestEgg
Жыл бұрын
We've added it to our list - they are all very different instruments though as an FYI
@yuriw777
Жыл бұрын
Good video! Would be good to see how to buy new bonds in Schwab
@DiamondNestEgg
Жыл бұрын
Noted
@yuriw777
Жыл бұрын
@@DiamondNestEgg Schwab does not offer new agency bonds issues! :(
@headlibrarian1996
11 ай бұрын
Are agency bonds being aggressively called? All of them seem to have call provisions allowing very quick calls.
@TheeBuddylee
Жыл бұрын
So which one best meets your criteria?
@kerrybyers257
11 ай бұрын
How do inherited Agency Bonds compare to Treasuries?
@mstrammd
Жыл бұрын
Are agency bonds acceptable for retirement accounts? Looking at 3-year Federal Home Loan Bank with 6% yield (callable). This is state tax free. I would think it is ok for retirement account.
@howardedward5339
Жыл бұрын
I would rather tie up my money at 5% via call protected cd/bond/myga than at 6% with zero call protection. I don't see the use case for GS bonds when they can be called.
@DiamondNestEgg
Жыл бұрын
Thanks for sharing
@Trust_but_Verify
Жыл бұрын
I gambled on a 13 year agency bond at 6.32%, I figured if it got recalled after 2 years that means I got a short term bond at 6.32%. It's equivalent to 7.09% CD for me.
@howardedward5339
Жыл бұрын
@@Trust_but_Verify aaah, I forgot about the tax factor, thanx! BUT if rates drop quickly then you are on the outside looking in, and the couple extra percent will dissapate. Locking in 5.3% for 5 or 7 via myga. We should compare at the end of 5 years who made more :-) But I like not having to worry for 7 years, and the ability to take 10% free withdrawl and reinvest in higher vehicles if rates go higher.
@garynickloy445
Жыл бұрын
I have bought a few of those 6%+ 10 yr agency bonds and some have been called. But if they are called in 6 months and you make 6% for 6 mos, it is still better than what you can get a 6 mo T-bill today.
@howardedward5339
Жыл бұрын
@@garynickloy445 Yes, but MYGA's are up to 5.4% for 7 years. I am looking at the long term play
@andyfisch1
Жыл бұрын
Hi, I just bought the Farm Credit bank Agency bond at 6.05% interest rate through Fidelity. In the past two days since I bought them it's showing they have lost .26% of their value. I'm confused as to why they are losing value?
@andyfisch1
Жыл бұрын
Hi, I called Fidelity today to find out the situation. The Bond value shows up in your account as the secondary market value if you decided to sell it on the open market. If you decide to sell the bond before the term as it was explained to me you can end up losing money.
@柳暗花明-d9x
Жыл бұрын
Could you make a video about how to interpret account information on Fidelity? I bought CD and T bills, why is there "today's gain/loss"? There is some extra money in the account, how did it come from? I don't understand Fidelity's account information
@DiamondNestEgg
Жыл бұрын
Noted
@Acemoddz
Жыл бұрын
Perhaps if you have time, floating rate notes vs t bills? I am looking at purchasing USFR/ SGOV etc; When there was that blip a while ago, i could not take advantage cause i had everything in t bills, if i had FRN i could have sold and purchased, at least thats how i think
@headlibrarian1996
Жыл бұрын
TFLO is the other floating-rate Treasury ETF. I have a bunch of USFR because it’s 100% Treasuries and fully invested, while TFLO is neither. I’m also buying Treasury FRNs directly for my IRA because I don’t need the liquidity of an ETF there and don’t want to pay ETF expenses (though both ETFs are pretty reasonable at 15bps.
@DiamondNestEgg
Жыл бұрын
We’ll add this onto our list
@enkibumbu
Жыл бұрын
Is there a website where I can see a comprehensive list of recently issued agency bonds so I can compare to secondary market displayed by Schwab?
@DiamondNestEgg
Жыл бұрын
Unfortunately, none that we are aware of
@headlibrarian1996
Жыл бұрын
Do agency bonds that are not state tax exempt pay meaningfully higher yields?
@DiamondNestEgg
Жыл бұрын
Not from what I've seen recently
@WallaceBMcClure
Жыл бұрын
I’m new in this. Are agency bonds only available via broker? I’m guessing there is nothing like treasury direct for agency bonds?
@DiamondNestEgg
Жыл бұрын
From our experience, they are generally only available via broker Wallace
@Trust_but_Verify
Жыл бұрын
Fidelity offers agency bonds.
@SATINNSEX
Жыл бұрын
how are where to buy
@DiamondNestEgg
Жыл бұрын
Most of the leading brokerage companies offer agency bonds at auction/ on the secondary market. Stay tuned for the next video!
@Coco-yw9nf
Жыл бұрын
I live in Texas.don’t have state or local taxes.
@DiamondNestEgg
Жыл бұрын
Good to know
@CobaltLobster
Жыл бұрын
You can get call protected CDs at 5.4% as of today…. Nice info but pass.
@dletinski8906
Жыл бұрын
CD interest not exempt from state/local taxes (NJ/NY/ etc.).
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