Behavioral, Investing Basics

How does investing only in the S&P 500 affect my portfolio?

Last week we discussed the basics of market cap and geography with stocks. These concepts also have an effect on the total portfolio.   Market cap – large Large companies, by and large (pun intended!), are relatively stable in terms of price, compared to other types of companies. The S&P 500 is a benchmark for …

Investing Basics

Stock basics: do you know them?

“An investment in knowledge pays the best interest.” – Benjamin Franklin   As we discussed last week, stocks and bonds are very different in how they’re used in a portfolio and how they’re priced.   Starting stocks: Initial Public Offering (IPO) When a private company decides to go public, that means its ownership shares will …

Investing Basics

Back to basics: what’s the difference between stocks and bonds?

Stocks and bonds represent two different ways of funding companies (and governments in the case of bonds). They’re very different approaches and satisfy different investing goals.   Bonds As we’ve discussed, bonds are a loan to the company issuing them. Its creditworthiness determines how much of an interest rate it has to pay to its …

Rules of Finance

Three Lessons from the movie “The Big Short”

If you haven’t seen this film, it’s a look at the great recession from the perspective of three groups who, unlike many others, saw what was actually happening in the mortgage bond market. They essentially bet against the housing market, to enormous profit. The movie explains some of the complicated products in an easy to …

Investing Basics

Should I buy more high-yield bonds to generate more income?

In personal finance, as we’ve discussed, many people use bonds to generate income. In the past, interest rates were higher, and investors were able to live off their bond interest and avoid invading principal.   Interest rates Currently a 10-year US Treasury bond yields less than 3%, and so an all- bond portfolio will not …

Investing Basics

Using bonds to protect against stock market volatility

Bonds can be used in various ways for individual personal finance. Here at Fab Fem Finance we’ve discussed that with lower interest rates, bonds don’t earn much, though they can be used for income. They are also useful for providing a cushion against stock market drops.   Investment grade bonds are not correlated to stocks …

Investing Basics

Can bonds be used for income in the portfolio?

Previously at Fab Fem Finance we’ve discussed whether younger people should have bonds in their retirement portfolios, and the answer is generally no. So why do investors use bonds, and under what circumstances should they be in a portfolio?   Bond yields have been much higher in the investing past Interest rates for bonds are …

General info

Do I need life insurance?

There are plenty of ads for life insurance in the media, and plenty of people selling it. But is it really necessary for everyone to have a policy? In addition, there are several different types of insurance, and sometimes it’s difficult to figure out which one is right, once a need for insurance is identified. …