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Please read Important Information at the end of this program. Recorded on 10/11/2024.
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Matthew Diczok
Head of Fixed Income Strategy, Chief Investment Office
Merrill and Bank of America Private Bank
[Matthew Diczok, speaking throughout video.]
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Bonds
Sometimes slow and steady wins the race, which is why bonds with their predictable income can be an important part of investment portfolio.
[Animated speech bubbles containing the following words.]
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Bond Ladder
Dividend Yield
P/E Ratio
Huh?!
Asset Allocation
Alternative Investments
Diversification
Total Return
Yield Curve
Market Breadth
Soft Landing
Net Asset Value
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'Translation, Please™!'
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Bonds
[A blue box surrounds the word "Bonds", in the top-right corner. A ridged circle underneath the word]
When you buy bonds, you become a lender earning interest in return.
[A blue, human silhouette appears with the word "Lender" beside it. Underneath, A blue percentage symbol appears with the word "Interest" beside it]
Governments and corporations issue bonds to raise money for projects like infrastructure, equipment, or daily operations.
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How Bonds Work
[The blue, human silhouette appears, on the left. On the right, the drawing of three buildings. A dollar bank note appears next to the silhouette of the person. A box with the word Bond inside and the ridged circle below it appears on screen. The box moves from the buildings to the person.]
By purchasing a bond, you're essentially lending them money.
[The drawing of three buildings appears below the previous drawings, on the left. On the right, the silhouette of a person. A circle with a percentage sign inside moves from the three buildings to the outline of the person. A calendar appears on screen. As a page turns, the circle with the percentage sign passes from the three buildings to the outline of the person.]
In exchange, they pay you interest payments on a regular schedule.
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Bonds are also called Fixed Income
That's why bonds are often called fixed income. Your income is essentially fixed for a specified period of time.
[At the top of the screen the drawing of the three buildings on the left and the silhouette of the person on the right, with a line below them. Below the line, a big calendar appears. A blue dot appears on the line below the drawings. As time passes on the calendar, and the years go from 0 to 10, the dot, which has a rectangle on top with the dollar sign inside, moves along the line towards the outline of the person.]
When that time period ends, the bond matures. Meaning, you get the principle, the amount you originally invested, returned to you.
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2 Potential Benefits:
[The box with the word Bonds and the ridged circle underneath appears on screen next to the text.]
Bonds offer two main benefits for most investors.
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- Interest Income
[The dollar bank note appears next to the words.]
First, interest income, which you can use to meet expenses or reinvest.
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- Portfolio with Diversification
[The drawing of a pie chart with a slice outlined appears next to the words.
And secondly, diversification to balance your portfolio.
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A bond portfolio might include:
- U.S. Treasurys
- Corporate Bonds
- Municipal Bonds
A bond portfolio might include: U.S. Treasurys, the safest bonds, because they are backed by the US government, corporate bonds with higher income potential, and municipal bonds for tax- free income.
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Bonds have risks
- Rising interest rates
- Inflation
[A red graph on an x/y axis with the line going up appears next to the words "Rising interest rates", while a red shopping cart with a dollar sign on it and an arrow pointing up appear next to the word "Inflation".]
Like any investment, bonds have risks, such as rising interest rates, or inflation affecting their value. However, bonds are generally considered relatively safe compared to other types of investments.
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Bonds
And that's a quick look at bonds. Thanks for watching, and stay tuned for more Translation, Please!
On-Screen Disclaimers:
Important Disclosures
The opinions expressed are as of 10/11/2024 and are subject to change.
Investing involves risk, including the possible loss of principal. Past performance is no guarantee of future results.
Asset allocation, diversification, and rebalancing do not ensure a profit or protect against loss in declining markets.
It's important for investors to remember that no investment is guaranteed to be "safe."
Investments have varying degrees of risk. Investing in fixed-income securities may involve certain risks, including the credit quality of individual issuers, possible prepayments, market or economic developments and yields and share price fluctuations due to changes in interest rates. Bonds are subject to interest rate, inflation and credit risks. Income from investing in municipal bonds is generally exempt from Federal and state taxes for residents of the issuing state. While the interest income is tax-exempt, any capital gains distributed are taxable to the investor. Income for some investors may be subject to the Federal Alternative Minimum Tax (AMT).
This information should not be construed as investment advice and is subject to change. It is provided for informational purposes only and is not intended to be either a specific offer by Bank of America, Merrill or any affiliate to sell or provide, or a specific invitation for a consumer to apply for, any particular retail financial product or service that may be available.
The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., ("Bank of America") and Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S" or "Merrill"), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation ("BofA Corp.").
Merrill makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of BofA Corp. MLPF&S is a registered broker-dealer, registered investment adviser, Member SIPC and a wholly owned subsidiary of BofA Corp.
Merrill Private Wealth Management is a division of MLPF&S that offers a broad array of personalized wealth management products and services. Both brokerage and investment advisory services (including financial planning) are offered by the Private Wealth Advisors through MLPF&S. The nature and degree of advice and assistance provided, the fees charged, and client rights and Merrill's obligations will differ among these services. Investments involve risk, including the possible loss of principal investment.
The banking, credit and trust services sold by the Private Wealth Advisors are offered by licensed banks and trust companies, including Bank of America, N.A., Member FDIC and other affiliated banks.
Bank of America Private Bank is a division of Bank of America, N.A., Member FDIC and a wholly owned subsidiary of BofA Corp. Trust and fiduciary services are provided by wholly owned banking affiliates of BofA Corp., including Bank of America, N.A.
Investment products:
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