Where To Put Your Cash This Week | Highest-Yielding New Issue Bond Offering We’ve Found

Summary

Highlights

• Deutsche Bank's 5.2% coupon bond could be a great addition to your portfolio if you're up for diversification. 🤓
• Buying bonds at par aligns your coupon and yield to maturity—basics any bond investor should know. 📊
• Navigating the debt ceiling drama: US has always avoided default, keeping treasuries unfazed. 🤞
• Investment-grade corporates might seem alluring but remember, they're a tad riskier than treasuries. 🌐
• Consider joining Diamond NestEgg's bond courses to enhance your bond investing know-how. 🎓

Key Takeaways

• The Deutsche Bank bond offers a 5.2% coupon for at least 10 years. 💰
• Understanding bond concepts like coupon vs. yield to maturity can strengthen your investment strategy. 📈
• Investment-grade bonds are tempting for diversifying away from treasuries but come with their own risks. ⚠️
• US treasuries are traditionally the safest investment, even amid political and economic uncertainty. 🇺🇸
• Stay proactive in bond investments to capitalize before potential rate changes. ⏱️

Overview

Where To Put Your Cash This Week | Highest-Yielding New Issue Bond Offering We’ve Found Transcription

• 00:00 - 00:30 5.2% for at least the next 10 years is this something that might interest you hello member super Savers and bond course fans I hope you're healthy and well in today's video I'm going to share with you a new issue Bond offering that I posted in Our member zone last week one that I feel is amongst the best I've seen in quite some time in addition we're going to cover two related questions that we've received quite often recently the first one is what's
• 00:30 - 01:00 the difference between the coupon and the yield to maturity on a bond and the second one is do I need to wait until a new debt ceiling is approved by Congress before buying more treasuries and should I buy corporate or municipal bonds in the meantime both of which are particularly relevant in my mind as some of you in our community diversify at least a part of your portfolio Beyond just new issue treasuries as usual here's our front of video disclaimer for
• 01:00 - 01:30 a detailed disclaimer please refer to the end of this video Let's dive in now folks as I've mentioned often in our weekly Bond updates most of the new issue agency and corporate bond offerings that are available at the moment are callable and typically the first call dates are not too far out usually a few months up to one to two years well last week we found one with a call date that was 10 years out and a
• 01:30 - 02:00 coupon of 5.2% which I felt was worth sharing with our community at the time of this taping it is available for purchase on Fidelity's new issue corporate bond offerings page Deutsche Bank is the issuer and Deutsche Bank is a Gip a global systemically important bank for those of you newer to gips I've linked our most recent video on global systemically important Banks and why we feel that they generally enjoy a big bit
• 02:00 - 02:30 of special government backing in the first pin comment for reference going back to this Deutsche Bank new issue here's the 5.2% coupon which will be paid annually it is a 30-year bond that is rated investment grade by both S&P and Moody's so if we click on this no here in the call protected column this call schedule appears showing us that the first call date is 10 years from now meaning that in the worst case scenario assuming a no default situation we would
• 02:30 - 03:00 get this 5.2% annual coupon for the next 10 years and in the best case scenario we would get this 5.2% annual coupon for even longer if we click here this will bring up more details on the bond including the qip here and if we scroll down further we can see that the minimum investment is $1,000 par value and the incremental investment amount is also $1,000 at the current time this Deutsche
• 03:00 - 03:30 Bank new issue corporate bond is also available from Schwab and Vanguard with a minimum purchase requirement of $11,000 on both brokerage platforms it's available on eay to but the minimum purchase requirement on eade is $10,000 not $11,000 I've linked our corporate bond videos in the first pin comment below in case you're interested in finding this Bond or something similar with your broker so you may have no notice from our earlier screen that the
• 03:30 - 04:00 offering period for the new issue ends on Friday October 11th at 11:30 a.m. let's move on now to the next section of this video and talk a bit more about what this means in the context of this bonds coupon and yield to maturity so let's say that we buy this new issue Bond before the offering period ends this expected price of $100 means that we would pay $100 per $100
• 04:00 - 04:30 par value we are buying at par if we assume that I buy the minimum purchase requirement of $11,000 this 5.2% annual coupon means that I would get an annual interest payment of $52 that's my $1,000 multiplied by my annual coupon of 5.2% if we buy the same Bond after the offering period ends it will no longer
• 04:30 - 05:00 be available as a new issue meaning that we would be buying it on the secondary Market where the price we will pay may be more or less than this new issue price here and that is the core difference between the coupon and the yield to maturity the coupon is simply the annual interest payment as based on the par the notional value of the bond the yield to maturity on the other hand is more comprehensive and takes into account the coupon the purchase price of
• 05:00 - 05:30 the bonds as well as the time value of money the easiest way to think about this for those of you who are already familiar with treasuries is that the coupon is basically this interest rate column here on the treasury auction results page and the yield to maturity is essentially this high yield column here and whereas the coupon on a treasury note or bond is fixed just like for most of the new issue corporate bonds that we see at the moment meaning it doesn't change over the life of the
• 05:30 - 06:00 bond the yield to maturity does usually change over the life of the Bond as it trades on the secondary market and its price changes now this can sound complex and confusing at first Bond beginners folks if you need a refresher on anything we've discussed up to this point please refer back to module one and specifically these videos here on coupons interest rates yield to maturity and Par value and module 10 for
• 06:00 - 06:30 corporate bonds of course in a quick nutshell though here are three rules of thumb if we buy a bond at par the coupon and the yield to maturity will be the same if we buy a bond above par the yield to maturity will be lower than the coupon if we buy a bond below par the yield to maturity will be higher than the coupon but back to today's topic now we hang out quite regularly on the bond boards and this Deutsche Bank one that we've talked about today did get us a
• 06:30 - 07:00 bit excited because as I mentioned earlier I feel it is amongst the best that I've seen in quite some time assuming that you are interested in investment grade corporate bonds and have the risk appetite for it as I always say everyone's Financial journey is different which is a great segue into the next section of this video according to the bipartisan policy Center C in its recent history of the
• 07:00 - 07:30 debt limit we've had seven debt limit near catastrophes between 2011 and 2023 that's one debt limit near catastrophe about every 2 years yes our 35 Plus trillion dollars of US debt is concerning to say the least as is the fact that we continue to issue more debt and spend at historic levels it also doesn't help that our government often Waits until the last possible moment moment to make a decision about raising
• 07:30 - 08:00 the debt ceiling but the fact remains the US has never defaulted on its debt and even when we had partial government shutdowns in the past every Administration so far has made sure that the debt service for already issued bonds continued uninterrupted precisely to avoid any default and my general assumption at this moment in time continues to be a no default scenario when it comes to our country and and our treasuries if you're newer to our
• 08:00 - 08:30 Channel or need a refresher on the debt ceiling and our perspective on a US default please do refer back to these videos here all of which are linked Below in the first pin comment as our Diamond Nest regulars hear me say often treasuries are considered to be the safest most liquid fixed income investment in the world which also means that all other bonds out there including corporates and munis are by definition at least a little bit less safe and or a
• 08:30 - 09:00 bit less liquid than treasuries so if you're someone who's concerned about the next debt cealing crisis in your treasuries but think that holding corporates immunities will keep you safe well in my opinion that is unlikely to take your worries away completely because while the industry generally considers investment grade corporate and municipal bonds to be safe conservative Investments overall the default rate for investment grade corporates and munis is higher than that for treasuries because unlike the US government some issuers of
• 09:00 - 09:30 investment grade corporate and Municipal debt have defaulted in the past rare as these defaults may have been so what do you think do you want to learn more about investment grade corporate and municipal bonds or are you sticking to treasuries possibly agencies drop a comment below and let everyone know all right memb super Savers and bond course fans I hope you enjoy this video and learn something new and if you want to really get up to speed on bond investing and building out your bond portfolio
• 09:30 - 10:00 before rates could potentially go down then check out this video here on our 2024 Bond courses or come join our next live sessions our next live bomb beginners course session will be on Friday October 18th at 5:00 p.m. eastern time 2: P p.m Pacific time we'll be talking about the 20-year t-on and 5year tips auctions and our next live YouTube member Q&A will be on Sunday October 27th at 5:00 p.m. eastern time 2: p.m. Pacific time where we'll be discussing the 25 and 7 your t-note auctions I've
• 10:00 - 10:30 also linked all the details on our bond courses and YouTube super Super Saver membership below this video for your convenience good luck to everyone who's picking up some bonds this week and see you again very soon with more brand new wealth building content for your financial Journey e