The Only Guide to a Winning Bond Strategy You'll Ever Need

I always thought that investing in bonds would be a pretty basic activity... You see an interest rate, you buy the bond, you get the payments. Wrong! I've been set straight by the book The Only Guide to a Winning Bond Strategy You'll Ever Need : The Way Smart Money Preserves Wealth Today by Larry E. Swedroe and Joseph H. Hempen. Contents: Introduction; Bondspeak; The Risks of Fixed-Income Investing; The Buying and Selling of Individual Bonds; How the Fixed-Income Markets Really Work; The Securities of the U.S. Treasury, Government Agencies, and Government-Sponsored Enterprises; The World of Short-Term Fixed-Income Securities; The World of Corporate Fixed-Income Securities; The World of International Fixed-Income Securities; The World of Mortgage-Backed Securities; The World of Municipal Bonds; How to Design and Construct Your Fixed-Income Portfolio; Summary; Afterword; Appendices; Notes; Glossary; Acknowledgments; Index While not an expert investor by any means, I thought I understood the basics about bonds. I figured that buying a bond meant that you looked at the rating on how strong the company is, chose something that was investment grade, and then buy the security that provides the interest rate that you want to achieve. The reality is far, far different. I didn't realize there's really eight risks you have to manage when buying bonds: interest rate risks, credit risk, reinvestment risk, inflation risk, event risk, tax risk, liquidity risk, and agency risk. I didn't understand that the lack of transparency in the broker market means that you can get severely burned on a bond purchase and end up losing your stated interest rate *and* your principal. And of course, there are a myriad number of products, each with benefits and risks, and you can easily end up buying something that was designed to be "sold", not designed to be "invested". Swedroe and Hempen do a great job in outlining these things and many more in a relatively clear way. I say "relatively" because there is a fair amount of math and financial concepts presented here that you *do* need to understand and think about. This book would never be mistaken for a "Bonds for Dummies" title, but for serious investors looking to thoroughly understand the subject matter without delving into all the minutiae of formulas and calculations, you'd have a hard time topping this offering. I'd definitely recommend this book to anyone who is serious in their financial investments and takes personal responsibility for them. While you may be at the stage of life where equities are more important to you than bonds, there's information here that will allow you to round out your financial education and acumen, and it's a purchase that will pay for itself many times over.

Very well-written and thorough. Swedroe offers a very level-headed, articulate approach to bond investing. He offers a perspective which is hard to argue with, and ushers the reader through the whys and hows. If you read the book, it's unlikely you'll make any significant mistakes, and you'll actually enjoy the process. This is a book I can't imagine NOT having in the library. Before you purchase anything other than treasuries at auction, read it.

The strength of this book is in combining thorough coverage of the published research with practical, easily applicable advice. The authors know all the academic studies, explain them in a way that we nonspecialists can understand, and digest them into a clear, very usable strategy. Both authors have years of real-world, top-level bond trading experience, which also makes their advice especially useful; but the coverage of research, for me, is what sets the book apart. If you know nothing at all about bonds, I wouldn't necessarily start with it (I think it assumes you are not an absolute beginner); but once you have a sense of the basics, this book is essential reading, on the shortest short list.

This book strikes an unusually nice balance between comprehensive treatment of the subject and a style understandable by the average investor. Swedroe and Hempen's explanation of the pitfalls of the secondary bond market is particularly valuable, and the advice on Treasury Inflation Protected Securities more than paid for my copy. It's a great complement to Swedroe's first book ("The Only Guide to a Winning Investment Strategy You'll Ever Need"), which lays out Modern Portfolio Theory, but does not go into different types of bonds or the mechanics of the bond market in any depth. While Swedroe's advocacy of Modern Portfolio Theory comes across, I doubt that any reader would understand this theory from the book on bonds. The book ends with short, informative appendices on callable bonds and TIPS, plus a glossary that's particularly valuable because of the arcane terminology used in the bond market.

Mr. Swedroe and Hempen's book continues Mr. Swedroe's aim to educate and empower the average person in the area of investing by making financial markets more understandable. Detailed expalanations of bond types like TIPS, corporate, municipals, etc.reveal to the patient reader the strengths and weaknesses of each.This detailed information is not easily available in typical financial magazines. Guidelines are provided to readers who create a recommended bond Investment Policy Statement allowing them to structure a personal bond plan while avoiding excessive expenses.