“I Don’t Understand Bonds,” Says Everybody

By Worawith @ Adobe Stock

“I don’t understand bonds,” says everybody. Which is a shame because bonds are a pretty nice asset to own right about now, as many of you do if you work with Your Survival Guy.

But here’s the deal. When investors hear what the T-Bill is yielding, their immediate reaction isn’t “let’s buy it.” Their reaction is let’s “beat it.” This isn’t a Michael Jackson song.

As an aside, my family loved MJ: The Musical which we saw in London last Spring before taking the Chunnel to Paris. On a sadder note, one of our favorite lunches there was at the Chiltern Firehouse. It burned down this February and is closed until further notice and may not reopen.

Getting back to bonds. If you take away one thing from today’s post, it’s that you need money to do special trips. Not a ton of it, but enough. And one sure way to kiss those trips goodbye is to needlessly lose it. When investors reach for yield, they risk their principal.

“Oh, but what about inflation Survival Guy?” you wonder.

What about it? When you have enough money, you can still afford to buy a dozen eggs. I can’t tell you how many times I hear how tens of thousands of dollars were lost because Mr. Greedy bought something for another half of a percentage point in yield. That’s a lot of eggs.

Action Line: Investing is emotional. Spending money is too. You need a “guy” you can rely on to help you do both. You can reach me at ejsmith@yoursurvivalguy.com. I’ll know you’re serious.

Originally posted on Your Survival Guy.