Hello, never bought an individual Bond earlier and all my bond investments via mutual funds - are under water this year.
So trying to buy an individual bond in my fidelity account to supplement 4% SWR later (retired this year and in perfect storm - sequence of returns risk - luckily holding cash for expenses for two years).
CUSIP - 3133ENT26 FEDERAL FARM CR BKS BOND 5.30000% 10/19/2026
Looks like 4 year BOND but may be called after 1 year.
I will get 5.3% - paid semi-annually and on 10/19/2026 - I will get my principal back unless called earlier.
Am I right in my understanding?
Any risk, I do plan to hold it till maturity.
Thanks,
Comments
I cannot find cusip is it correct cusip?
Is it fed farm credit holdings?
A- grade?
Did they disclose analyst reports to you?
Pls let me know correct cusip
Will do more research and answer your questions
If you don't care about price fluctuations holding until mature or called maybe best actions
I bought this for mama last wk
Symbol
842400HH9
Description SOUTHERN CALIF EDISON CO SER 2021J 0.70000% 08/01/2023 BOND CALL MAKE WHOLE
Shares + 10,000.000
Price 96.90
Amount -$9,704.19
Interest $14.19
Settlement Date 10/14/2022
Think 4.7% ytm
No bankruptcy
20 mutual funds etf hold this bond
Fyi
May get some of yours for mama if correct research/appropriate/ good bond
Mama retired right before COVID,
Her portfolio are all bonds and did extremely well during c19 crashes lost 3% during COVID
Now -19%
No safe haven these days.. She is holding on to long term and may take 4 yrs before recovering
She keeps telling me hope her and papa do not die before all monies recovering lol
Craziness
FEDERAL FARM CR BKS CONS SYSTEMWIDE BDS
Rating: Moody's: Aaa
Rating: S&P: AA+
Coupon: 5.3
Maturity: 10/19/2026
Callable: Yes
CUSIP - 3133ENT26
Personally, I prefer to buy individual bonds rather than bond funds for exactly the reasons that you mention. Here's some of the bad things that can happen with an individual bond:
• Issuer bankruptcy- (Given the Moody's and S&P ratings, improbable with this one)
• General interest rates decline, so issuer calls bond before maturity. You get your money back, plus accrued interest
• General interest rates continue to climb, so that newly issued bonds pay better interest rates, but your money is tied up until maturity.
The overall direction of general interest rates between now and maturity is your main concern. If you're comfortable with locking in 5.3%, susceptible to a premature call, then it seems like a reasonable situation. Your understanding is correct- I hope that this is helpful.
last thing
Add google search to your email gmail
**FEDERAL FARM CR bankrup** they will send email alerts to your gmail right away to take actions regarding any bad news
Corp bonds maybe harder to sell than etf or stocks have to be accepted by the brokerage first and sometimes they accept at extremely low curve balls prices if you are looking for cash.
Like you stated if not worries about prices fluctuations and have extra cash for 3 yrs, good bond until maturity if no untoward events.
Looks like good bond imho
Caught on margins call back in may 2022 everything crashed then, so hard to sell some of my bonds positions for cash.
https://www.farmcreditfunding.com/ffcb_live/debtSecurities/fixedRateBonds.html
Rating by Moody's is AAA. "The Aaa long-term senior unsecured rating on systemwide debt securities issued by the Federal Farm Credit Banks ..."
https://www.moodys.com/research/Moodys-announces-completion-of-a-periodic-review-of-ratings-of--PR_460762
I'd say that the two risks are early call (if rates are falling), and buyer's remorse (if rates are rising). Not much default risk, and if held to call/maturity, no interest rate risk.
Edit: I see OJ posted while I was writing. Seems we are in complete agreement, down to the direction of interest rates being the primary concern.
FYI - My account is with Fidelity so it was the source of CUSIP number.
3133ENT26 - it got fully subscribed so couldn't buy today.
So went with cusip - 3134GX4W1 FEDERAL HOME LN MTG CORP MTN 5.75000% 10/27/2027 ('AAA' rated - callable every quarter), invested a small amount.
Plan is to collect 1.875 % every 3 months till maturity or called earlier.
Purchase is in retirement account so it will fund my withdrawal.
I have been buying CDs - 1 month - riding the interest rate increases - started with 1.75 to now 3.015, may go for higher maturity when dust settles (Central banks pause).
I don't plan to open account with any other entity (bank or brokerage) - just Fidelity is fine for me now.
Now going to hunt for Treasury bills/notes - shorted duration - to build up the bond ladder, will post what I do and/or ask Q.
Thanks a lot to everyone.
D
Edit - corrected the % above - 1.875 (Thanks Graust).
If you buy CD day price 99.965, is that the same price you place for trade
Tried get CD for mama this morning keep getting rejected - Morgan Stanley CD ytm 5.1% 12 months
Also Bought mama gm bond bbb 3 yrs mature 5.4% ytm
Cusip 37045vaw0
Slow buying in next 6 9 months
Don't jump in too fast and put all eggs in one basket
I recently helped a friend set up 6-12-18-24 mo T-Bills/Notes ladders at Fido and Vanguard. He will rollover into 2-yr T-Notes as each matures.
Progress - I checked my Fidelity account - trade executed today at 3:58 p.m. I now own 100 bonds of 3134GX4W1 FEDERAL HOME LN MTG CORP MTN 5.75000% 10/27/2027. I will ignore the market price which will fluctuate. I expect to get 143.75 every quarter till the bond is called.
Next looking for Corporate bond category - JohnN mentioned about it - will look for new issue and will come back with Q.
Thanks to all of you for helping me in this journey.
D
Never thought I would actually be buying treasuries, or CDs, or individual bonds in general, in my investing account! Thanks everyone for all the knowledge-sharing!
I am looking at new issue now in my fidelity account - cusip - 17330RME2 CITIGROUP GLOBAL MKTS HLDGS IN SER N 5.45000% 10/21/2024 MTN - looks like 2 year Bond - callable after 1 year and then can be quarterly.
Rating: Moody's: A2
Rating: S&P: A
Coupon: 5.75
Maturity: 10/21/2024
Callable: Yes - after 1 year and then quarterly.
My understanding - will collect 2.725 every six months - 2 times (i.e. 1 year) and then the accumulated interest with face value when it matures or called.
Plan is to hold till maturity or called.
Just 10K investment so moving slow, hopefully dust will settle by then.
Thanks,
D
Does anyone else have different ideas about how far out to go on the yield curve?
Any body tempted by "make whole Calls" ? As I understand them, if called the issuer has to also pay you the interest owed till maturity. While there is an opportunity cost if rates have fallen significantly, you would do better than with a traditional call.
Several low yield bonds ( APPL 2025 under 1%) are trading for 85 to 90, ie as almost zero coupons with YTM of 4 to 5%. I would think the issuer would be unlikely to call a bond with that low an interest rate.
There are others paying higher rates, which would also cost a bundle to call.
I do prefer buying Treasuries at auctions, but I was saying that it is easy to START a Treasury ladder by buying in the secondary market.
Thanks,
D
(100 divided by 98.686) = 1.0133,
then the "^" symbol (I have no idea what that is)
and then (12/4) which of course = 3.
How does all of this = 1.4048, and how does 4.05% magically appear?
Bank preferred - JPM-C & -M & BAC-B
Agency bonds - will collect dividends till they are called - not for trade.
FEDERAL FARM CR BKS BOND 6.44000% 11/01/2032
FEDERAL HOME LN MTG CORP MTN 5.75000% 10/27/2027
Looking for corporate bonds????
I have been playing with 1 month CDs - rates from 1.75 to now 3.15.
Once they mature - will build a treasury bill ladder as YB suggested above.
Thanks, thanks & thanks.
For example FHLB 3.5% 7/2032 YTM 4.77
Beats equivalent US Treasury YTM 4.2
All depends on if you believe interest rates will be lower between now and then