Latest / The Curve / Breaking Down Bonds & Why You Might Want To Invest In Them.

Transcript

Breaking Down Bonds & Why You Might Want To Invest In Them. · The Curve

0:00
So we have our investing bootcamp starting very shortly on the 30th of June and we're so excited.
0:06
Yes, it's get your A into G, finally start investing, learn all the stuff that you need to and actually just stop listening to this podcast and do and do the thing you need to do.
0:16
Well, I mean, please keep listening to this podcast.
0:18
But the point is, don't just learn about investing, actually do it, get actionable, start taking off all the things you need to.
0:24
It's super easy and straightforward and we're going to have you sorted within a month.
0:28
So you can find all the details in the podcast show notes. There's link and if you've got questions, please get in touch. This is starting really soon and the next few days.
0:36
For all information, if you want to join the bootcamp, it starts in a few days, find the details in the podcast show notes.
0:42
Gosh, this feels quite fun.
0:44
I am recording this from inside my new favorite thing.
0:49
So unless you're watching the video to this, you can have no idea what I'm talking about.
0:53
Can you hear that?
0:55
That is the sweet, sweet sounds of my new Lexus.
0:59
I never really thought of myself as much of a car girly. I've always been one of those people that never really could see myself driving a nice car.
1:09
And let me just tell you, that has entirely changed.
1:13
Now I cannot imagine myself in any other car. I haven't known what I've been missing out on, but now I'm absolutely ruined for any other car.
1:23
I've felt like I've got my shit together while driving this car.
1:27
I turn up to meetings with confidence. I don't park my car around the corner because I'm embarrassed of it.
1:33
I don't know, I guess just driving it has made me realize how much luxury and enjoying something that is within my reach.
1:42
This is not an unrealistic car for me to say for, which yeah, it's just, I don't know, it's just changed my perspective on what I would want to invest in and what kind of car I would feel as a long term investment.
1:54
And I think that when it comes to investing in a car, because let's be honest, it's not an easy quick purchase.
2:02
You've definitely got to think about it and work towards a big goal, like buying a any big ticket item, whether it be a car or something else.
2:10
But it's just made me feel way more motivated and excited to one day have a car like this.
2:16
And so what we've done with Lexus is create like a co branded kind of educational resource.
2:23
Basically, it's a pretty PDF that you can just download from the podcast show notes.
2:28
And the purpose of it was just to come up with some really clever tangible straightforward steps that will help you save and actually get towards that financial goal.
2:37
Whether it's saving for a Lexus, whether it's saving for a holiday, I think that a lot of the time we think something luxurious is totally out of our budget, but actually it just comes down to planning.
2:48
Yeah, so if saving for a car or something like that is something that you would like or you just want to know what those sort of tips and tricks are, then it's a totally free resource.
2:58
And you can just download it from the podcast show notes, but most importantly, thank you so much to Lexus for letting me drive in this absolutely phenomenal car.
3:07
I have just found so much cooler.
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And like picking up friends, I'm like, don't worry, I'll drive. No, it's fine. I'll pick you up.
3:16
Yeah, thank you so much, Lexus. Big, big fan. You've ruined me for life.
3:22
Welcome to Raisin the Curve, a podcast designed to teach you everything that you need to know to be better with your money.
3:27
Come and learn alongside me, Sophie Hallwright, a total beginner from the finance expert Victoria Harris.
3:33
So I've asked all of the questions you wish you could so that finance, investing and growing your wealth actually makes sense.
3:39
Yes, it's expert education, but with promise will not be boring. And in the wise words of sheer...
3:44
My mom said to me, you know, sweetheart, one day you should settle down and marry a rich man.
3:49
And I said, mom, I am a rich man.
3:51
Come and talk and learn and laugh with us because together we really can raise the curve.
3:57
I feel like we're a DJ and someone's come up and be like, play Beyonce, play Beyonce.
4:02
And you're like, I'm off.
4:04
I've definitely been. One of those annoying drunk girls is like, can you play and like try to cut off some cool song?
4:11
And at a wedding, drunk people alone are annoying. Let alone drunk people trying to tell you what to play.
4:17
What I will say, one of your birthday parties you hired a DJ and there was like a garden party.
4:23
Do you know the one I'm talking about?
4:29
It was the shittest music.
4:33
Great party, just shitt DJ.
4:37
Shitt DJ and like when you've hired someone, like you are not a famous artist, like don't play what you want to hear.
4:44
But it's on me as the host is way too scared to like ask him to change the music.
4:48
And so all my friends were like, I'll do it.
4:50
You know, a bit of liquid confidence.
4:52
And no one listened.
4:53
One of my friends got a can thrown to a head.
4:56
My sister got abused. Like it was like, yeah.
4:58
But for suggesting the music sucks.
5:00
I remember people coming up to me like, Bert, can you please, please tell them?
5:03
I'm like, yeah.
5:04
And what do you mean it's great?
5:06
I was just like, I cannot be dealing with this confrontation.
5:09
Whereas I would be like, I've paid you, put something on with lyrics that people are going to get down and dirty too.
5:15
Like this is not a way too cool to play.
5:18
I want another party.
5:19
So if anyone who knows the brand powers the drink.
5:23
Oh, yeah.
5:24
And New Zealand Australia, it was a pretty global now.
5:27
I held like the first pal's summer party.
5:31
Oh, my God.
5:32
It wasn't actually pals back then.
5:33
It was even before it was pals.
5:34
So that's my little.
5:35
So for context, there's like a drink brand that it always has a start of summer party to kind of kick off summer.
5:41
And it was a friend of mine.
5:42
And he was like, hey, Vic, we need to have some really big backyard.
5:46
And I was like, yeah, sure.
5:48
Is that not going to be inside?
5:49
And I was like, perfect.
5:50
Awesome.
5:51
And now it's like, these parties are now like massive.
5:53
They're ticketers.
5:54
It was started in Vic.
5:55
I was like, oh my God.
5:56
I will forever be VIP.
5:59
Can we just talk about what happened at that party?
6:03
Because there is the most iconic thing.
6:06
Like it was the weirdest, most bizarre, but like quite a good story.
6:12
Is it a podcast movie?
6:13
Yeah.
6:14
Okay.
6:15
If you have any issue with bodily fluids, skip this.
6:18
Then yeah, yeah, just put us on.
6:20
Yeah, fast forward.
6:21
I didn't stay there that night right.
6:23
I didn't have my boyfriend's at the time.
6:25
And I remember waking up being like, what a great party.
6:28
Nothing went wrong.
6:29
I was like, to the amount of people that were there and were drunk.
6:32
And like, there was nothing went wrong.
6:34
That is amazing.
6:35
Then draw back to my house.
6:37
And the person who organized the party was like, I'm back.
6:40
Got something to show you.
6:41
I was like, oh, dear God.
6:42
What?
6:43
He's like, your name is not too happy.
6:45
I was like, what do you mean?
6:46
He was like, someone has shapped on their porch.
6:52
And I was like, oh, God.
6:54
Like someone mid-party.
6:56
We still don't know who it was or what happened.
6:58
It was kind of like the biggest who done it in my life.
7:02
And yet, when obviously there was, could it have been a dog?
7:06
Well, I was like, how do they know it was from my party?
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Anyway, she wasn't very happy.
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And I just moved into this house.
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So I was a new neighbor.
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I hadn't even met her yet.
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So I had to go on a holiday so I'm so sorry for my disgusting friends.
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Don't even know who it was.
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Anyway.
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Yeah.
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We were sitting there in the afternoon on my deck eating McDonald's
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because we were obviously really hungry.
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And she leans over the fence.
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And she's like, I'd like to eat my lunch on my porch.
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But I can't because there's a mess.
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This is because we're just taking ages to clean it.
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We're like, yeah, we'll come over and clean it up.
7:40
We'll come and clean it up.
7:41
Oh, God.
7:42
You know, when you just hang over, everything takes ages.
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Yeah.
7:45
I will get to it anyway.
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We're like, right, we need to go and clean it.
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But anyway, the point of this whole long-winded thing,
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how we got here, I'm going to backtrack because I do know how we got here.
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I've got to even how we got here.
7:54
So we did a podcast a few weeks ago where we were talking about fixed income
8:00
as a potential investing.
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And fixed term investments, which seems like a set period of time.
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An investment for a set period of time.
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So since then, we have been inundated with DJ requests or podcast requests
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to do an episode and talk about what bonds are.
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What fixed term investments are?
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Is it a term to bond?
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Is it the same as fixed interest?
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Is it like a lot of questions?
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Let's go too far.
8:27
So we did a poll where we were like,
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be honest, do you actually want to learn about bonds?
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Or do you just want to listen to Justin Bieber?
8:35
Yeah, exactly.
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And we had 100% of people say, yes, please, but explain it simply.
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100% of people.
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Seven people.
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Okay.
8:44
Look, we need some more people voting.
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So it's like, oh, I think I came first.
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How many people were in the category?
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One.
8:50
Okay.
8:51
Yeah.
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We're trying out a new thing.
8:53
All right.
8:54
Polls and nuance.
8:55
Butterfly.
8:56
Yeah, yeah.
8:57
No, it's great.
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There's more than seven people who listen to the podcast.
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So look at everyone.
9:00
Oh, I missed a few zeros.
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I mean, 7000.
9:02
Yeah, we also had someone, Samantha, who requested this episode literally forever ago.
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And we've had this saved for so long.
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And I don't know why we haven't got to it.
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I think the reason that I haven't invested in bonds is because I don't totally understand
9:18
them.
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And I do hear them spoken about a lot.
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Like, they're in the media.
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They're in random.
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I love what I say that.
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I don't watch things or look at things in the news.
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However, just a care of weekly, but it has become more spoken about.
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And I think since we did an episode a few weeks ago, that episode was called,
9:34
should you be investing in fixed income?
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We touched on bonds in it, but we didn't go into much detail.
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And I think the reason it's probably sparked a lot of people's interest is that in that particular
9:46
episode, one of the things that we spoke about was there's different theories or ways of thinking about
9:54
how you should think about what is in your portfolio.
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Like, do you have specific funds?
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Do you have stocks?
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And one of the things that came up was there's a school of thought that says,
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based on your age, just how much fixed income you should have.
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So say I'm 30, 30% of your portfolio should inverted commas be fixed income.
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And I know that everyone invests with different risks.
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So that's not like a one size fits all.
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But it did make me think maybe we should do an episode that explains in more detail
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actually what bonds are, how they work, how they move and how we should think about
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does it fit into out overarching in these?
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Because I've got zero.
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Do you have in your retirement fund or like your superannuation?
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Are you in a high growth?
10:42
Yeah, yeah.
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Because if you're in a high growth, you might have a really, really tiny portion of bonds,
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but like really, really tiny.
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If you've got more of a like conservative fund, then you'll have a higher proportion.
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So you might be investing in bonds, but not actually not for your superannuation or through pension.
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That's just something to be aware of.
11:00
But yeah, maybe let's start.
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I guess the reason we haven't spoken about it a lot is because of our age, right?
11:06
Like it's not a huge, it shouldn't be a huge part of our investment strategy right now.
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If we are all, say, going after the same goal of retirement, it shouldn't be.
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We've all got, well, you and me have got at least 30 years until we retire.
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We shouldn't have a huge allocation to bonds or fixed interest, fixed income.
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It's all kind of the same thing.
11:26
Do you know it's so funny in that episode that we've just mentioned?
11:29
I don't know if you should listen to it.
11:31
I don't think you have.
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I actually did challenge the people we're interviewing on that because,
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and given their platform was all about fixed income, right?
11:40
And so like for a lot of people, that's a great way because it's a lot of risk.
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It's the idea that it's, which we're going to get into in a second in terms of like the returns,
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like how much we're getting back, the time it's invested for.
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There's a whole lot of things to consider when it comes to where your money's being invested.
11:56
But I actually did say that to them because one of the things that they said was the age thing.
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So say you should have this much in whatever.
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Because both of them, these founders of platform called Blossom,
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they were saying they have almost 100% of their investments in Blossom,
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which is all fixed income.
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I did challenge them on it.
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I was just like, oh, but why?
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Because I'm not scared of the stock market.
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So it was just like an interesting thing.
12:23
It comes down to your goal, right?
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What are you investing for?
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So like if you were putting all of your money savings investments into buying a house in four years' time,
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of course, you should have your majority of that.
12:38
And one of them was towards a house.
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Whereas I'm just kind of making a broad statement of like,
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people, oh, age, if your goal is retirement, then you shouldn't.
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Kind of, you should be investing majority into the stock market because
12:51
it's just going to do much more of a heavy lifting for you.
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So it totally depends on your, like used to we can talk about ages,
12:57
but people have different goals within those different ages, right?
13:01
But maybe a good place to start is like just to recap on the different groups of things
13:06
that you can invest in, which is what we call different assets.
13:09
And like, cheers, we've touched on it.
13:11
Well, we haven't touched on it.
13:12
We've done five years of podcast.
13:15
We may have mentioned the stock market from time to time,
13:19
but that is when you are owning a part of a company.
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So just remember that because when we get to talk about bonds,
13:28
it's very, very different.
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So like you are owning a share in a business,
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and shares can be very high returning,
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which means they can do really, really well over the long term.
13:39
But they're going to move up and down, right?
13:41
You're going to see share prices move up and down, up and down, up and down,
13:44
which means they're volatile.
13:46
It's kind of like, I don't know, really, you're emotionally unstable friend.
13:50
Yeah, yeah.
13:51
You don't know what she's going to be in.
13:53
Ooh, it's going to be a good one.
13:54
It's going to be a bad one.
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If she had a shit nights late, she might be a total nightmare.
13:58
If she's like eaten very well in medicine seven times that day,
14:01
she might be like, what are you running?
14:02
She's like, yeah, overall, she's a really, really, really epic friend.
14:05
Yeah, yeah.
14:06
Then bonds is like the real children.
14:09
That's just like, yo.
14:11
Yo, what are you up to?
14:13
Yo, like, sensible, reliable.
14:16
We'll be there if you call them.
14:18
Insistent.
14:19
Yeah, consistent.
14:20
I reckon you're a bond.
14:21
I reckon I'm a bond.
14:22
I'm totally shares.
14:24
Don't you reckon?
14:25
But I've got a bit of shares in me.
14:27
No, I...
14:28
I think I've got a bit of bonds in me.
14:29
Yeah.
14:30
I don't actually know at all.
14:32
No, chill.
14:34
The reliable, sensible friend.
14:36
You know what you're getting.
14:37
They turn up on time to coffee.
14:39
They turn up on time.
14:40
They know all over the show in terms of...
14:42
Get your money from brunch.
14:43
Yeah.
14:44
Then they've got your back.
14:45
Yeah.
14:46
Oh no.
14:47
The shares have your back too.
14:48
They're just a little bit...
14:49
Oh, you're all over the show.
14:50
Yeah.
14:51
They might forget.
14:52
They had some spice to your life, you know.
14:54
But with a bond, you are not buying part of the company.
14:57
Yes.
14:58
You are lending them money.
15:00
So kind of think of yourself as a bank.
15:03
You are lending...
15:04
Or you're lending a friend money going, hey, sorry.
15:06
Yeah.
15:07
I'm happy to lend you $1,000.
15:08
But I need a paid back, you know, by the end of the year.
15:11
And I need you to pay me $10% interest.
15:14
Imagine.
15:15
You'd be like, if you...
15:18
So, okay.
15:19
So let's just think about this then.
15:21
So an example of a share, a.k.a. rent.
15:26
I love that you put drama queen next to her.
15:28
I like rude.
15:30
So that is like your Apple.
15:32
It would be Tesla.
15:33
It would be Netflix.
15:34
It would be.
15:35
It's individual companies, you know.
15:36
And when you buy a share of that business, you're a part owner
15:39
with all the other hundreds of thousands of people
15:41
that have invested in that business,
15:43
whereas if you are the boring bond Victoria Harris,
15:47
you are not buying part of the business.
15:51
You're actually...
15:52
You're kind of partaking in an IOU.
15:55
Yeah.
15:56
For that business.
15:57
And some businesses like taking Apple, for example.
15:58
They might issue bonds.
15:59
They might want people to loan the money.
16:02
They also have the ability for people to buy shares in them.
16:05
Like companies can do both.
16:07
It's just different ways of getting money to grow.
16:10
Yeah.
16:11
Yeah.
16:12
And then we've got property and then cash.
16:14
Now, when we were speaking about fixed term investments,
16:18
cash, like the term remind me, fixed term investments.
16:22
Yeah.
16:23
As in a bond.
16:24
Or do you mean...
16:25
So fixed term investments can mean bonds
16:28
because they're for a fixed term.
16:29
Six months, one year, two years.
16:31
They can also mean term deposits.
16:33
So cash.
16:34
So it's so confusing that term deposits are considered cash.
16:39
I know that technically that's the thing.
16:42
But honestly, I find that super confusing.
16:44
But let's just park that for one...
16:46
Okay.
16:47
Like park for all of the fixed income.
16:49
No, let's park the cash part of fixed income.
16:51
Yeah.
16:52
And let's just talk about bonds right now.
16:54
But I guess the best way to look at fixed term investments
16:57
means any investment for a fixed period of time.
17:00
Yeah.
17:01
So it can be term deposits.
17:03
It can be bonds.
17:04
Got you.
17:05
Yeah.
17:06
And then we've got a little wild card here which is crypto.
17:08
So that's essentially lots of different ways.
17:10
That you can grow your money over time.
17:12
The amount that you'll get back on those investments
17:15
totally varies because some of these investments
17:18
are actually a little bit more risky than others.
17:22
Like your crypto, if this was your wild card friend,
17:25
this would be like the person you met at like 12 a.m.
17:28
and like a Mexican bar.
17:30
Yeah.
17:31
Doing shots.
17:32
And you might not see until you go to Mexico for a surf.
17:34
Yep.
17:35
Six years later.
17:36
The rule breaker.
17:37
Yeah.
17:38
That's like, let's go jump out of a plane.
17:39
Yeah.
17:40
Anything.
17:41
Yeah.
17:42
I'm predictable.
17:43
But real, real fun.
17:44
Terrifying as well.
17:46
Yeah.
17:47
But you want a little bit because everyone loves a little bit of wild.
17:50
You would be fine.
17:51
I reckon jumping out of a plane, wouldn't you?
17:53
Yeah.
17:54
You see, I don't think I was.
17:55
I don't know if I could get myself out of the plane.
17:57
Do you know how I got to do my first skydive?
18:00
No.
18:01
I was drunk.
18:02
Absolutely.
18:03
Sorry.
18:04
Sorry.
18:05
I was drunk when I committed to it.
18:06
Oh.
18:07
I was going to say I'm sure that's a lady.
18:08
And then I woke up and I was like, I hope she forgot.
18:11
And then she texted me.
18:12
And you're really paid for it.
18:13
Yeah.
18:14
We booked it.
18:15
Everything.
18:16
She texted me.
18:17
She was like, hey guys.
18:18
Looking forward to our skydive.
18:19
Oh my god.
18:20
It was the next day or something.
18:21
Oh my god.
18:22
And we were all like, we're doing this.
18:24
You know how we, you have a group chat and you're waiting for someone to pull it out?
18:27
Yeah.
18:28
No one.
18:29
Everyone was like, I was like, radio assignments.
18:30
I was like, oh my god, we're doing this.
18:31
We're doing this.
18:32
We're doing this.
18:33
And then as soon as one person was like, yep.
18:34
Yeah, it's a bit.
18:35
It was kind of like, oh gosh.
18:36
But I'm so good.
18:37
I did it.
18:38
I actually wasn't that terrifying.
18:39
Didn't feel like you're falling or doesn't not feel like you're falling.
18:42
You just, you don't have time to think about it.
18:43
I remember I like swung my leaf.
18:45
The flight up was scary enough.
18:47
I was like, it's a tiny, tiny plane.
18:48
You were all picked in.
18:49
But I remember swinging my legs over the side of the plane.
18:51
And you've got, you've stripped to like an instructor.
18:53
And I swung my legs over and I was like, I wonder if my shoe laces are.
18:56
Oh, yeah.
18:57
I was just like, you just gone.
18:58
Like, you don't have time to think.
19:00
And I was like, I hope my shoes are tied on.
19:02
But I am too much for control free.
19:04
And you're so far.
19:05
I'm not.
19:06
You're so far from the world.
19:07
It's tiny.
19:08
Whereas a bandage jump way more scary.
19:10
There's rocks like just there.
19:11
A lot of funny story.
19:12
We came down to what and we watched your runs videos.
19:15
Like all of our friends was quite funny.
19:17
And he runs faces.
19:18
Is this what I could go pro?
19:19
And they they film you and then you can obviously buy it, you know,
19:22
for like a hundred bucks or something.
19:24
And we were watching your runs.
19:25
We're like, oh my god, your friends are best.
19:27
And then we watched the last friend and he completely passed out.
19:29
No, he didn't.
19:30
No, he didn't.
19:31
He woke up at the last like.
19:32
He didn't realize he'd passed out.
19:33
No, because he woke up and he was like, thought obviously I thought it was really short.
19:35
And his whole time he said that.
19:37
Holy moly.
19:38
And it was so funny.
19:40
I can't even believe you couldn't pass out.
19:42
Is that because he was so stressed out.
19:43
I don't know.
19:44
He was just.
19:45
I was thinking that might be me.
19:46
Funny as thing.
19:47
And we were like, okay, now it's yours.
19:48
And everyone was like, oh, you just asleep the whole time.
19:52
And you've just paid for this incredible experience.
19:55
You slept through it.
19:57
So bonds.
19:59
So what actually is a bond?
20:01
I feel like we've covered this.
20:03
So it's essentially let's say company A wants to have $50 million
20:07
injected into the business for the next three years to grow some initiatives.
20:12
Lone to the business.
20:13
So I think that yeah, it's like it still has to pay it back.
20:16
Yeah, but I mean, that makes total sense.
20:19
Yeah, like it's basically we need $50 million.
20:21
We don't want to take on new shareholders.
20:23
Yeah.
20:24
So we're going to do this as a bond, which means they obviously have to pay interest
20:29
or like an agreed return, which is what generally like 5% or something.
20:34
Yeah, it depends.
20:35
There's obviously risk companies, riskier companies that you would lend money to.
20:40
You'd be like, you know what?
20:41
You're pretty risky.
20:42
I want you to pay me 20% return.
20:44
And there's other ones like the government.
20:46
You'd be like, you know what?
20:47
You're not going anywhere.
20:49
I'm happy for you to pay me like.
20:50
I mean, government, super market, etc.
20:53
Yeah.
20:54
What would there be a scenario where a bond does return something like 20%
20:59
or is it generally like under 10% because 10% sort of stock market return level?
21:06
Yeah.
21:07
It would be a very risky kind of what we call a junk bond.
21:09
Junk bond.
21:10
Junk bonds.
21:11
Yeah.
21:12
Those are very, very risky bonds.
21:13
And you want that?
21:14
Well, someone that wants a 20% return.
21:17
Right.
21:18
Yeah.
21:19
But there's a risk, right?
21:20
Like, there's no investment where it's safe and you get a great return.
21:25
Then everyone would do it.
21:26
So there's always, if something, and this is close with anything, bonds, if you get a random phone call
21:32
from a scammer, if they're like, look, I can give you a 50% return, that just screams
21:38
risk to me.
21:39
Do you know what I mean?
21:40
It just screams like, why are you paying me so much for this investment?
21:43
Do you know what I mean?
21:44
There's just got to be risk.
21:45
So anyway.
21:46
Yeah.
21:47
So you lend a government, a company, money, and they pay you back in regular intervals as well
21:53
as paying you the lump sum at the end.
21:55
Oh, okay.
21:56
Yeah.
21:57
So it's what the payment is called a coupon.
21:58
And it's kind of like a coupon.
21:59
You know, when you're like, it comes from couponing where you like, you know,
22:02
get a deal.
22:03
Yeah.
22:04
Yeah, which is quite weird.
22:05
But yeah.
22:06
So say you're almost like an automatic payment and share account over time.
22:09
Yeah.
22:10
And so if it's two years, they might pay the coupon monthly, they might pay it three monthly,
22:14
like they structured in all different ways.
22:16
So it's so admin for the person getting the money and the business paying it out.
22:20
Yeah.
22:21
It just feels like a lot of admin.
22:23
But I guess what's the alternative?
22:24
If you give away equity for your business, which would be worth, you know, millions or billions
22:28
or billions, or you give away control, you give away equity.
22:31
So yeah.
22:32
So if you think about it for a government, right?
22:34
Like you cannot buy shares in the government.
22:36
That they're going to buy a part of the UK.
22:39
The only option is for them to issue bonds.
22:42
And for people to lend them money to do things.
22:45
Obviously they get taxes and stuff.
22:47
They get revenue otherwise.
22:48
But like one of the ways that they can get money is through people.
22:52
Yeah.
22:53
And so they might be like, look, we need a new bridge.
22:55
It's going to cost us billions of dollars.
22:57
We're going to issue a bond.
22:58
Who wants to give us money to help fund the bridge.
23:00
And then the bridge might start earning toll, like a toll revenue.
23:05
Yeah.
23:06
That pays the, you know, they paid the loan back.
23:08
So it's like there's some, it might be a new hospital.
23:10
It might be, but a lot of times it is for like infrastructure, like roads, bridges.
23:14
Like that kind of stuff.
23:15
Why, or like how, or where would you even find that opportunity?
23:19
You know, like, and also if you were going to buy a bond, like let's just say,
23:23
wanting to buy a UK bond.
23:26
Do you get to see the detail of how and what they're using that money on?
23:31
So for example, if like the UK government will be like, we need to build a bridge.
23:35
And we need 50 million to do it.
23:38
If they issue a bond, do they specify we're building a bridge on the corner of blah, blah, blah.
23:44
You know, is it, is it that detailed?
23:46
Or is it kind of just like, you can get that information if you want.
23:49
But it's more at the company level, right?
23:52
Or at like, do you trust the company?
23:54
Do you believe that the company can pay this back?
23:57
You've been looking at kind of like when you're investing.
24:00
And then you're watching the profits the company has generated, right?
24:04
When you're watching the, the profits that this company has generated,
24:07
you're looking back in history and we're like, oh yeah, they've grown their profits every year.
24:10
Okay, I'm going to, that gives me some confidence they're going to do in the future.
24:14
You look back at a company issuing a bond and go, oh yeah, they've done it before.
24:17
They've paid back, they've paid back their bondholders.
24:20
Therefore, this one is pretty low risk.
24:23
But I'm not meaning like in terms of a risk assessment.
24:26
I'm not meaning, if I was buying UK bonds, I'm not worried about the UK government not paying it back.
24:33
Well, that's why the UK government bonds, the return is so low.
24:37
Right.
24:38
Because exactly that, you're not worried about them not paying it back.
24:42
But then my other question though is let's just say though that I'm not stressed about the payback.
24:46
The payback then, do I get visibility on what they're using the money for?
24:51
Let's just say I'm interested or is it one, they're not like, we're issuing a bond to build a bridge.
24:55
It's like, they're just issuing a bond.
24:57
And if you want to, you can find out what they're spending it on.
24:59
Yeah.
25:00
Yeah, it's a bit of that.
25:01
But like, what does it matter what they're spending it on for your point of view?
25:03
I don't know.
25:04
I think Booker.
25:05
So, so why do you cast?
25:08
Yeah.
25:09
I think I've been more worried about what the return they're going to be.
25:12
I know.
25:13
I guess I'm trying to give context.
25:15
It's like, this is who would buy them.
25:17
Secondly, when it comes to investing for me, I like the idea of understanding where my money's
25:22
going and what it's doing.
25:24
And I just find it interesting.
25:25
Like, if I'm invested in a company, I know the company, I understand what they do.
25:30
I know what their products are.
25:32
The difference with the bond is it's kind of just, I think the reason we haven't talked about it is because
25:37
yes, it's boring.
25:38
Like, we're building a bridge.
25:40
I'm curious.
25:41
I'm curious.
25:42
It's a really good point that you make, though, because I think when you're investing in bonds,
25:45
you're investing in them for the predictability.
25:48
You want to know, okay, this month, I'm going to pay this, this month, I'm going to pay this,
25:53
or this year, you know, this is, this is my return.
25:56
I can, I can see it.
25:57
It's not going to change.
25:59
That gives that, that predictability, which is why bonds a lot of older people invest in bonds
26:05
because they don't have income.
26:07
You know, they're investing in them in their retirement.
26:09
They want that steady, predictable income that they can live off.
26:14
So that's why, that's why you're so excited about investing in shares, right?
26:18
Because you're like, oh, what product are they going to launch next week?
26:21
And what, you know, that's the excitement that comes with investing in shares.
26:25
But also, it also comes with frustrations because that's why we have to invest in lots of things
26:31
because a lot of those things don't happen predictably or like, you know, regularly.
26:36
You know, you don't, you have no idea what your Netflix return is going to be in a month's time.
26:41
Whereas if you invest in a bond, you would.
26:43
And that's the difference.
26:45
Does that make sense?
26:46
So for some people and, and you're in particular, you might, actually, I don't want,
26:50
I don't care about the predictability.
26:51
I'm investing for the long term.
26:52
I, you know, it gets me way more excited to invest in companies and know what they're doing.
26:57
And that's great.
26:58
Other people at certain points in their lives or for certain goals are like,
27:03
I actually don't want that, that fear or that excitement.
27:07
I just want to know what my return is and what my money can grow at because I like the predictability.
27:15
Do you know what?
27:16
I would love to know.
27:17
Maybe we do a poll.
27:18
A poll or a question or something.
27:20
If you're listening and you can see it will have hopefully figured out how to put it underneath this episode.
27:25
I would really love to know.
27:28
Are you interested in the idea of bonds or like something that's like fixed income,
27:35
something that gives like a steady, reliable return or not?
27:39
Like I want to know if people are interested in that.
27:41
Would you consider that kind of investment if it made sense for short term stuff?
27:48
People could have also been burned in the past, right?
27:50
They might have invested in the stock market and not diversified.
27:54
And actually lost money and be like, you know what?
27:57
I don't want that feeling ever again.
27:59
I just want to invest in something steady.
28:01
I don't know.
28:02
You know that there's everyone so different.
28:03
People might have kids.
28:05
They're like, I just don't want to take the risk.
28:06
But I know I want my money to grow by the inflation.
28:09
So I'm going to invest in bonds.
28:11
So there's a little bit of growth, but not too much.
28:13
I want a little bit of spice, but not too much spice.
28:15
There's just like not everyone's like you.
28:18
Yeah, I know, but that's what I mean is I find it really hard to understand how someone
28:22
wouldn't want their money to grow at a much faster rate.
28:25
That's what confuses me.
28:27
Over the long term though, we have to keep saying that.
28:30
Yeah, yeah, yeah.
28:31
But I am meaning that.
28:32
When I think of investing, I'm not thinking of investing for the next six months.
28:36
Well then I 100% agree.
28:38
I think if you have greater than 10 years until you retire.
28:42
Or five, even.
28:43
Yeah.
28:44
You should be investing in majority of money in the stock market, not in bonds.
28:49
So I guess bonds or fixed income is great for shorter term things.
28:54
If you need the money in the shorter term, then it makes sense.
28:56
Or you need to live off your investments, which is generally when you're older.
29:00
Yeah.
29:01
I mean, if I could have millions and bonds and just be living off the interest, we're quite nice.
29:05
So is that kind of a thing if you have way more that you can put in and you can be living
29:11
off of their return.
29:12
Yeah.
29:13
Then fine.
29:14
Yeah.
29:15
Yeah.
29:16
Yeah.
29:17
But a lot of people who are younger don't have the money.
29:18
Like my parents, for example, they used to be older, but like age aside, they sold their house
29:23
while they bought a new one, putting all that money into the stock market.
29:26
Or like, you know that there's so many different, I guess, stages in life.
29:31
If you sold a business and you didn't want to take that risk again, there's a lot of different reasons
29:37
why people would invest in bonds.
29:40
Is investing in bonds given what's going on in the stock market right now in terms of, you know,
29:45
Trump being in power, people feeling a little bit like shaky about that.
29:49
If someone has been watching what's going on and they're not thinking this is a buying
29:53
opportunity, they're thinking holy shitballs.
29:55
I don't want my money in the stock market.
29:57
That could also be exactly.
29:58
That would be a time for them to be like, okay, bonds is my thing.
30:01
Totally and bonds are considered a safe place, right?
30:04
Or a safer place.
30:05
And so when the world is uncertain or global growth might be slowing or people think
30:10
the stock market might not do as well, people will put more, maybe they've gone from 50%
30:16
to 70% of their portfolio into bonds, for example.
30:21
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32:22
I think the one thing to be aware of is there is a lot of just like there is different types of companies
32:31
you can invest in.
32:32
So some might be small companies, big companies, tech companies, healthcare companies, whatever.
32:37
There's also different types of bonds.
32:39
We talked about government bonds.
32:41
If we think of like a spectrum, you've got government, like if we're in the children of bonds,
32:48
like government bonds are like the sleepiest, sleepiest, sleepiest.
32:52
They're taken as any.
32:53
Boring.
32:54
Like they are marginally above cash, right?
32:58
Right.
32:59
So like the difference between leaving a money in a transactional account.
33:02
They're pretty much holding hands with cash.
33:04
Yeah.
33:05
Yeah.
33:06
Yeah.
33:07
Yeah.
33:08
They're pretty risk-free.
33:09
Yeah.
33:10
They're boring.
33:11
Yeah.
33:12
Just like governments are pretty boring.
33:13
And then you've kind of, if we're moving along the spectrum, you've got corporate bonds,
33:17
which is like companies that you set, like Apple, issuing bonds, slightly more risky because
33:22
they're not with the government.
33:24
They're with the company and companies have a whole mountain of issues sometimes.
33:27
Usually get a better return though.
33:29
So we're saying four government bonds.
33:32
So the bond returns about 3%.
33:34
Then corporate bonds would be more like 5%.
33:39
Yeah.
33:40
Little bit higher.
33:41
Then if we move up the spectrum even more, we've got what we call these junk bonds, which
33:48
you're getting in the tens.
33:49
You know, like you're getting junk bonds.
33:52
These are the high risk, high risk bonds.
33:55
They're usually the companies on their knees going help.
33:58
Right.
33:59
And so with those, how would you decide?
34:02
I don't know.
34:03
I guess like let's say they were giving a 10% return or 15% return or something.
34:06
Yeah.
34:08
I mean, it feels quite intense to be like, go, look, they're financials.
34:12
Go do this.
34:13
Like what would be the things that you would need to look for to be?
34:16
Because it's the chance that you actually could get money back or halfway through that bond
34:20
that just stops.
34:21
Yeah.
34:22
And they then can't pay you back because they've gone bankrupt or whatever?
34:24
Exactly.
34:25
Yeah.
34:26
Yeah.
34:27
And we're not talking like 10%.
34:28
Right.
34:29
We're talking like less than 10%.
34:30
Like it's like, what a bother.
34:31
You know, if you could get that in the average in this terms of like, you know, the index of
34:36
the S&P 500, which is on average 10% and that's 500 companies, why would you go so risky
34:42
and choose one random junk bond?
34:44
Well, that's why it's like, it's about, it's about 6% that they're paying.
34:47
Oh, yeah.
34:48
That's not, yeah.
34:49
So we're not, I mean, we're still in the bond camp.
34:51
We're still, you know, that's high for bonds.
34:53
You know, we're still at the bond.
34:54
Yeah.
34:55
And if you then compare a junk bond to the S&P 500 or, but remember, we've got to keep
35:01
coming back to people that invest in bonds.
35:03
They want the predictability.
35:04
But it's not predictable because it's a junk bond.
35:06
It's about to be thrown in the bin.
35:07
Yeah, but it's still in the like, fixed term, lower risk investment.
35:10
Is it still lower?
35:11
Yeah.
35:12
So it's still, it's, it's, it's, because it sounds, we're getting, I mean, it sounds very risky.
35:17
Like it's still on its knees and it's saying, how?
35:20
Not like, yeah, maybe it was a bit, but like, you know, out of, versus government, you know,
35:25
it's like, we're still in the, the lower risk investment camp, you know, and I'm talking about
35:32
the risky grandma.
35:34
Like, grandma's in particular a very low risk.
35:37
They're not going to do anything like crazy.
35:38
And we're talking about the crazy anti-betty in there is not nearly as crazy as like the
35:44
crazy teenager.
35:45
Do you know what I mean?
35:46
And so weird though, because honestly, like as someone that doesn't invest in bonds and is like,
35:51
you know, trying to be open minded about it, junk, the idea of a junk bond, like the way
35:55
that it's been explained to me, sounds far riski than the stock market.
35:59
Let's not spend too much time on it, because there's like very few junk bonds.
36:02
Like, I'm just trying to say there's like a, there's like a switch triangle by the teacher.
36:06
Okay.
36:07
And also, I think, don't get too concerned.
36:10
Like, it's good to know there's different types of bonds.
36:12
Like there's green bonds, which are bonds that are only used on green projects.
36:16
So climate-friendly projects, solar panels, that kind of stuff.
36:19
The easiest, it's good to know there's different types of governments.
36:22
There's corporate, there's junk, there's green.
36:25
But I think for someone that's like, I want to invest in bonds, but I don't know which one to pick.
36:30
Again, there's, there's bond ETFs.
36:33
There is bond funds.
36:35
You know, like there is, there is too many options.
36:39
Well, there's ways to get diversification across different bonds.
36:43
So you don't have to pick government corporate.
36:46
You know, you don't, like, you don't have to know which one's a good with.
36:48
If companies are going to default and not pay back.
36:51
Like, someone's done that for you, and they've created a fund.
36:54
And that's what usually like a conservative fund.
36:57
Or like, if you, if you...
36:58
If you have your money, there's like a managed fund or something.
37:00
Yeah, they'll have bond funds.
37:02
And they're investing in lots of different.
37:04
Like, they'll have some mainly government, then they'll have some corporate, then they'll have some junk bond.
37:08
Like, they'll have a whole lot of interest.
37:10
Yeah, okay.
37:11
So that's, it's like, if you're like, oh, God, I don't know what she is to invest in.
37:14
Just go with an ETF.
37:16
You know, go with an exchange trade fund.
37:18
If you don't know what bonds go, go with a fund.
37:20
Go with it.
37:21
Go with an already created group that you don't have to do the picking for their magazines.
37:27
Yeah.
37:28
I think it would be amazing that if you could in the investing club this month come up with three.
37:33
In example, like maybe, I don't know, three bond ETFs or three bond options for people.
37:39
If they want to look at some of these, but I feel like I'm overwhelmed by what you've just...
37:45
Because as soon as you were talking before, I was like, oh my God, like the thought of having to go and pick.
37:50
Even picking an ETF.
37:52
I'm like, oh, I just don't even know where to start.
37:54
Yeah.
37:55
And I think that's, people would have that same mentality when it comes to shares, right?
37:59
Yeah.
38:00
If they don't know, and they're not familiar with it, it's like, oh my God, do I buy Netflix, right?
38:04
By Google, what do you know?
38:05
And it's like, removing that overwhelm can be done in all different asset classes, right?
38:12
Like it's like, there's even cash funds, there's property funds, there's bond funds, there's...
38:18
But I think that that's the thing that is when there's so many.
38:21
Yeah.
38:22
It's like going to a restaurant with like 17 pages and real small font.
38:26
You're like, okay, there's literally every cuisine here I could think of, but like that's overwhelming to me, you know?
38:31
Yeah.
38:32
And I think if you've got someone that's like, there's the shift specials.
38:34
Yes.
38:35
If you could just do that in the investing club, there's some shift specials.
38:38
A shift special?
38:39
Wow.
38:40
That would be awesome.
38:41
If anyone does want to join the investing club or learn about some of what these investing ideas are,
38:46
we'll put the link in the podcast show notes.
38:48
Yeah.
38:49
But the easiest way to invest in bonds is either through funds, or you can actually do them directly through writing platforms as well.
38:57
In the UK and New Zealand.
38:59
In the UK and New Zealand.
39:00
Australia everywhere.
39:01
Yeah.
39:02
Maybe with the ones that you select, we could do like universal options so that you people are relatively there.
39:06
If they do want to put a little bit of money into this type of investment.
39:09
It's also, yeah, being aware.
39:12
If you are picking one bond, it's the same as picking one company to invest in.
39:17
Yeah.
39:18
So either do your research and invest in multiple or use an ETF for a fund.
39:25
Because, yeah, just like putting all your eggs in one share basket for one company basket, it's the same with with bonds.
39:32
It's just a different way that they get money, but it's still the same individual company.
39:37
Yeah, yeah, yeah, yeah.
39:39
Like if you don't know that a junk bond, I don't know, a particular junk bond or a green bond or whatever,
39:46
is the right one for you.
39:48
Just like if it came to picking one particular company in the AI space, you go for the diversified option,
39:54
which is an ETF, which is kind of like the best and the worst and everything put together so that you're diversified.
40:00
Yeah.
40:01
I think it's worth talking about when interest rates increase and how that impacts bond returns as well.
40:10
Yes, because I think with that, my main question to the bonds is, depending on what is going on in the market,
40:19
and also macroeconomics, what is happening globally, does that then mean that it's a better time to get a bond?
40:27
Does it mean that you get better returns for bonds?
40:30
Is it totally irrelevant and it kind of doesn't matter?
40:33
Like are there times in economic cycles where it's like, cool, it's a good idea to buy a bond?
40:38
Yep.
40:39
Or is it purely based on how old you are?
40:41
No, there's definitely like, I guess, more strategic ways that you can invest in bonds if you were like a bond trader,
40:48
for example, in your link on there every day, being like, oh yeah.
40:51
But I guess the overarching thing is that if interest rates go up, so say New Zealand or UK, the interest rate went up,
40:59
this means that borrowing money is now more expensive.
41:03
So your mortgage rate is going to go up because you're borrowing money from the bank by a house.
41:08
Oh, which means if you're borrowing money from someone for a bond, the interest rate that you return to that goes up to.
41:14
Yeah.
41:15
You're demanding.
41:16
That makes so much more sense.
41:18
You're demanding a higher interest rate.
41:20
So interest rates go up.
41:22
The returns on bonds can be better.
41:25
Yeah.
41:26
What investors are like, well, why would I lend you money when interest rates have gone from maybe like 1% to 2%
41:33
and it's like, I want more than that because otherwise I was put in the bank and in that.
41:38
So interest rates are going up and up and up and up.
41:42
And investors will demand higher returns from bonds.
41:46
So bond rates will go up, up, up, up, up, up.
41:48
Yeah.
41:49
So essentially really, really simple terms.
41:51
Interest rates go up.
41:53
The returns you could get on bonds go up to.
41:56
Well, and just think of it from an investor's sense, right?
41:58
Like, if I'm sitting here with say like $10,000, I'm like, where should I put it?
42:02
And there is a term deposit in the bank.
42:06
Like, if that's cash, there's very, very low risk, almost non-existent risk.
42:11
And I can get 5% on that.
42:13
And there's a bond over here that I could invest in that's got more risk.
42:18
It's with a corporate, you know, they want to build a new facility or something, yeah.
42:23
And they're only paying me 3%.
42:25
Why would I go the risk?
42:27
Absolutely.
42:28
Yeah.
42:29
Why on earth would I do that?
42:30
So therefore, everyone would choose the cash in the bank.
42:33
And therefore this company over here could get a bond.
42:36
Okay.
42:37
Okay.
42:38
So that's kind of in the simple form.
42:40
That's how it works.
42:41
And that's why bond prices will always, will not always be there.
42:45
They need to be more attractive.
42:47
Got it.
42:48
Cool.
42:49
Yeah.
42:50
Should we do a few key takeaways?
42:51
Should I ask you?
42:52
Sure.
42:53
Like when would you, when would bonds make sense to invest in your life?
42:57
When I am older, it could be a good way to shuffle my money into something that's going to get me a return that's bigger than inflation.
43:04
That's better than like a term deposit, but it's like pretty chill.
43:09
And also, I think at that stage of my life, if I have quite a lot of money, which I'm hoping I do, then the amount of return I would be getting on those bonds actually could be quite decent in terms of living on.
43:21
So I'm not like chewing away at my main amount of my money, but I'm getting kind of like almost a salary from my bonds.
43:28
Or?
43:29
Yeah, sorry.
43:30
It could be if I am close to needing the money.
43:35
Like a mum and the crowd.
43:37
So like if I need my money to buy a house, if I'm saving for a trip, if I'm saving for something, and there is a chance that the shares at all times of the day or night could drop or tank or go higher down.
43:50
If I'm going to need that money in a short space of time, putting it somewhere like bonds could be a good idea.
43:56
Like, so as an example, let's say I'm trying to save up for a new garden.
44:01
I need lots of new trees like this beautiful one in our store.
44:05
Yes, very much.
44:06
We have some house stolen from somewhere in this.
44:09
Then say I'm investing in all these plants in six months' time.
44:14
I know how much I'm going to need to buy all those plants, and I don't need that to be said.
44:19
I don't want it to sit in the stock market in case in six months.
44:22
I don't know, Trump's made some stupid decision and the whole stock market fell through the floor.
44:27
Then I have no money to buy my cool plants.
44:29
I might shuffle that money into bonds instead for a period of time so that I know it's not going to go anywhere.
44:35
But it's also not being eaten away by inflation.
44:38
Yes.
44:39
And then thirdly, I would say I would invest in bonds.
44:43
If I wanted to just feel like I had a well-rounded portfolio in the sense that I've got majority of my stuff
44:49
and risk highest-spicy stocks would ever.
44:53
I don't know.
44:54
I just felt like for a comfort kind of makes me feel like I could sleep better at night.
45:00
I've got a portion of money and something that's much, much lower risk.
45:04
Or if the world's just a bit chaotic and you're like, you know what?
45:07
I'm going to be too stressed out.
45:09
This is too stressful for me.
45:11
I want a bit of a chilled part.
45:15
I want a bit more chill in my portfolio.
45:18
Yeah.
45:19
Right.
45:20
Do I know what you're doing?
45:21
Amazing.
45:22
This is like one of our old school episodes when it was like, tell me what a stock is.
45:26
Can I just finish on something?
45:28
Oh gosh.
45:29
So is it a quote?
45:30
No.
45:31
It's just something going on in the world right now.
45:32
And so it's quite topical that we're talking about bonds and bond returns.
45:36
And you may hear people talk about bond yields.
45:39
Now yields are just returned.
45:41
Like just swap out those two words.
45:43
Like it's super easy.
45:44
Yeah.
45:45
It's like rental yield.
45:46
Yeah.
45:47
I don't know if I'm just going to open a can of worms and you're going to be like, whoa.
45:51
Like, no.
45:52
Okay.
45:53
Right now, they are rising bond.
45:56
Like the bond returns that you're getting in the US are rising because the US is becoming
46:00
more risky place to invest.
46:01
So government bonds, the return that you're getting is going up and up and up because.
46:06
Because it's not Trump is a risky investment.
46:08
It's an uncertain place.
46:09
And just like if a corporate, if a company had a bit of a wobble, you know, like it's the
46:13
same with the government.
46:14
The government is a reflection of the country and the country's having a bit of a like.
46:17
So people are like giving you money is getting increasingly scary.
46:21
Yeah.
46:22
Where I increasingly nervous.
46:23
I want to be compensated.
46:24
So we're getting rising bond yield bond returns in the US on government bonds.
46:30
So this means that this flows through to higher borrowing costs in the US.
46:35
So it's more expensive for the government to fund things because they have to pay people
46:41
more when they're borrowing the money.
46:43
So this makes people scared because it means it's going to start impacting the growth
46:50
in the US because to fund that new bridge now costs a lot more.
46:55
So what we are seeing is these kind of shorter term bonds.
46:58
So bonds have lives of, you know, it could be six months, it could be six years or 16
47:04
years.
47:05
You know, it's kind of, yeah, so you can have short bonds, you can have long ones.
47:08
What we are seeing play out in the US is because right now it's more risky.
47:12
We are seeing these short term bonds pay a higher return than the long term ones.
47:18
Interesting.
47:19
I would love that.
47:20
Which is a real recession indicator.
47:22
Oh shit.
47:23
It's a big red flag.
47:24
Yeah.
47:25
It's like one of the, the, the, the, the most, yeah, it's a bit of the signs of a recession.
47:30
Because people are, it's now more risky to buy a short term bond than is a long term
47:34
one, which doesn't make any sense because if you're holding an investment for the long
47:37
term, that should be way more risky because it's a longer period of time.
47:42
And therefore there's more chance something could happen to that government or to that
47:46
corporate.
47:47
So therefore long term bonds are always, you always get slightly more a higher return because
47:52
you're taking longer term risk if that makes sense.
47:54
You know, if I'm only leading you money for six months, the likelihood of something going
47:58
tits up is not like, it's, it's very low chart.
48:01
Well, you know, like, whereas if I'm not letting you money for six years, that's six years
48:06
of what's going to happen in the world, what's going to happen to your company, what's
48:09
going to happen to the project, what's going to happen to you.
48:11
So you're normally rewarded for giving someone money for a longer period of time.
48:15
Yes.
48:16
And sorry.
48:17
Maybe I should have said that earlier.
48:18
But yeah.
48:19
So what we're seeing in the US now is shorter term bonds are like one to two years and now
48:21
paying more in terms of their return, because of all the shit that's happened in the, that
48:27
is happening in the US right now.
48:29
People are getting really, really nervous.
48:31
The return on government bonds is going up because people are very concerned about the
48:34
government.
48:35
So think of all those bonds that are already locked in for that long term.
48:38
They don't, they don't change.
48:40
The return doesn't change on those, whereas the shorter term ones now.
48:43
So we're seeing this inversion and giving it a bit of a complexity now.
48:47
So it's almost the idea that like bonds by nature are meant to be loaning money for
48:52
a long period of time, that is the whole purpose of them.
48:55
As soon as a government or a country is doing that for a shorter period of time, it's
48:59
like, no, no, no, there's always short term bonds and long term bonds.
49:02
It depends.
49:03
It's just the return.
49:04
It's just the return.
49:05
The return bonds and the return is higher, which makes them more risky.
49:09
If that is higher than long term bonds, that's bad.
49:13
So it's almost like there's a, like the scales are like wobbling and what should be like
49:19
the order of return in terms of risk and time is being muddled.
49:23
Exactly.
49:24
And it's like everything's a bit out of kilter because a normal situation is that if you're
49:29
holding a longer term bond, you pay a slight, slightly more in a return because you're holding
49:36
it for a longer period of time.
49:37
Whereas what we're seeing right now, because the current right now is in such a basket
49:41
case in the US, then bonds, bond returns are a lot higher.
49:45
So where everyone's kind of watched, and this is why the stock market fell, it recovered
49:49
from Trump's tariffs and then it kind of had another little wobble over the, over
49:53
a week or so.
49:54
It was a bit small, but people are watching this now a lot.
49:56
So quite scary.
49:58
But also interesting.
49:59
Just interesting now.
50:00
So now if you read a headline of like government bond yields rising, like you kind of know
50:05
what, and that just means, okay, government supposed to be a safe place.
50:08
It's not really a safe right now.
50:10
No, yields means returns.
50:12
Bond, government bond returns arising.
50:15
That means bad news.
50:16
Because increased return is like your copy, you have to be compensated for something,
50:20
you know?
50:21
Yes.
50:22
It's so eki at the moment, isn't it?
50:24
Yeah.
50:25
Eki, eki, eki.
50:26
Anyway.
50:27
Cool app.
50:28
Cool.
50:29
Cool app.
50:30
That was so cool.
50:31
No, but in all seriousness, that was cool.
50:32
Real shakur.
50:33
I don't know why I drew shakur.
50:34
Yeah.
50:35
I know.
50:36
You're always doing text as well.
50:37
You're like, you're like, see it, 10.
50:38
Shakur.
50:39
I like putting it in my outfit.
50:40
Skeetress got off and down and go, this is the mirror.
50:42
I should, anyway, take that out.
50:43
That's really cronch.
50:44
No.
50:45
But you know what?
50:46
You're not allowed to be edited to not be cronch.
50:48
It's not fair.
50:49
I sound cronch all the time.
50:51
Thank you so much for listening to Raising the Curve.
50:53
These conversations are designed to teach you everything you need to know to be better
50:56
with your money, saving, to investing, to talking with your friends about your salaries,
51:00
or that stuff.
51:01
And if you like what you heard, we would love if you could please hit subscribe wherever
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51:07
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51:11
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51:12
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51:13
So please do it.
51:14
Okay.
51:15
Bye.
51:16
Okay.
51:17
Quickly.
51:18
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51:21
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51:22
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51:26
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51:31
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51:36
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51:41
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51:42
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51:43
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