RL095 – Will my bonds lose money? 23 Ideas
Today on the Retirement Lifestyle Show, Roshan Loungani, Erik Olson, and Adrian Nicholson go through 23 bond alternatives you should know about. They talk about REIT, Cash, Structured Notes, TIPS, and Gold.
[04:01] The Essence of Having Bonds in Your Portfolio [10:05] The Long-term Equity Index Put [14:25] What is a REIT (Real Estate Investment Trust)? [20:16] Cash Versus Bonds [27:10] Structured Notes and Bonds That Don't Pay Interest [29:10] Inverse and Buffered ETFs [31:08] Negative Roll Yield [41:10] The Treasury Inflation-Protected Security [47:10] Arbitrage and Market-Neutral Strategies [49:50] Gold, Defensive Currencies and Cryptocurrencies
For more links and the full show notes keep scrolling down!
Roshan Loungani can be reached at roshan.loungani@aretewealth.com or at 202-536-4468.
Erik Olson can be reached at erik.olson@aretewealth.com or 815-940-4652.
Adrian Nicholson can be reached at adrian.nicholson@aretewealth.com or at 703-915-8905.
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Full Show Notes:
Bond Alternatives
For the most part, people add bonds into their portfolios for two main reasons: portfolio price stability and some form of income twice a year until maturity. If you've been following market trends over the past couple of months, you've probably come across such headlines: Bond yields are rising. And yes, bond yields have indeed risen over the last several months. But does it make sense to try and get into bonds in the current bond environment? First, if you get in right now, you'll have a lot of ground to make up before yields get anywhere close to attractive. Second, although the 10-year Treasury yield has doubled over the past year, the yields still stand at less than 2%-- such low yields can't even keep up with inflation. And with interest rates currently low, right now presents the perfect opportunity for some people to seek out bond alternatives.
What is a REIT (Real Estate Investment Trust)?
A Real Estate Investment Trust (REIT) is a professionally managed trust that holds real estate assets and allows individuals to invest in large-scale, income-producing real estate. REITs are one of the oldest and best-known bond alternatives. What happens is that a REIT firm typically owns and operates income-producing real estate such as shopping malls, office buildings, apartments, resorts, self-storage facilities, warehouses, and mortgages. Despite comparable similarities to real estate companies, REITs do not acquire real estate properties for resell. They instead buy and develop properties to operate them as part of their wider portfolio. The one thing that makes REITs so lucrative is the fact that 90% of the profits go back to investors. However, just like all investment avenues, care should be taken before settling on REITs as an investment option.
All opinions expressed by podcast hosts and guests are solely their own. While based on information that they believe is reliable, neither Arete Wealth nor its affiliates warrant its completeness or accuracy, nor do their opinions reflect the opinion of Arete Wealth. This podcast is for general informational purposes only, and should not be regarded as specific advice or recommendations for any individual. Before making any decisions, consult a professional.