A practical how-to guide for every investor who wants to build an all weather portfolio—even during low interest rates.
Learn how to choose your stocks and bonds allocation. It is time-proven wisdom, and encourages you to take control of your finances. Learn how to use CDs, bonds, and bond funds to manage risk/reward even during low interest rates.
In this short book about investing, you will learn:
- How to choose your stocks/bonds allocation
- How to become immune to changing interest rates
- When to use CDs and individual bonds
- How to choose a good bond fund
- How to hedge against unexpected inflation
Available as a paperback, or a Kindle ebook. Click to read reviews and Look Inside!
Contents:
- Foreword by Larry Swedroe
- Introduction
- Who Should Read This Book?
- Start with a Sound Financial Lifestyle
- Why Bother With Bonds?
- Stocks are risky in the short-run, and the long run too!
- Bonds Make Risk More Palatable
- Bonds Can Be A Safe Bet
- Bonds Are An Attractive Investment Diversifier
- Life Is Complicated. Bonds Are Not.
- What is a Money Market Fund?
- Are CDs Better Than Bonds?
- What Are Bonds?
- What is a Bond Ladder?
- Individual Bonds or a Bond Fund?
- Bonds: Risks and Returns
- Yield, Price And Making Comparisons
- How To Compare Individual Bond Returns
- How to Compare Bond Fund Returns
- Total Return””To Measure And Compare Performance
- How To Reduce Risk From Interest Rates Changes
- Duration: The Point of Indifference to Interest Rates
- Duration: The Measure of Sensitivity to Interest Rates
- How To Reduce Risk From Unexpected Inflation
- Real versus Nominal Interest Rates
- Why Include TIPS In Your Portfolio?
- Credit Quality or Default Risk
- Yield, Price And Making Comparisons
- Build The Bond Portion Of Your Portfolio
- Start With Your Goals.
- How Much Risk Is Right For You?
- Understand How Much Risk You’re Taking
- Take Your Risk In Stock Market, Not Bond Market
- How Much in Bonds? How Much in Stocks?
- Your Needs Change Over Time
- The Importance of Low Cost
- How Much To Diversify Bonds?
- The Importance of Low Cost
- Five Low-Cost Strategies You Can Do Yourself
- Taxes Matter
- Example Portfolios (both good and bad)
- Common Misconceptions Important to Correct
- Stocks Are Safer In The Long Run
- Holding a Bond (or CD) to Maturity Eliminates Risk
- Stocks Are Safer Than Bonds
- The Best Funds Have The Most Stars
- A One Percent Fee Is Small
- Rising Interest Rates are Bad for Bond Holders
- You Can’t Beat the Market Using Index Funds
- Use Multiple Investment Companies To Diversify
- You Need Many Mutual Funds to Diversify
- Frugal Means Cheap; Stingy; Miserly; Tightwad
Reviews Worth Noting:
“In his simply stated and entertaining book, Rick Van Ness eloquently instructs the reader on how to do bonds right—in fact, better than any single book I’ve read.”
— Allan S. Roth
“Read it, enjoy it, and profit from it—before it’s too late.”
— William J. Bernstein
“Rick provides the information needed to select the best type and amount of bonds necessary to provide safety and income for one’s portfolio.”
— Taylor Larimore
“If you are a DIY investor . . . you should read this book. It will steer you clear of areas you need to avoid and into where you should be. A quick read filled with valuable info!”
— Robert Wasilewski
“This book should be part of America’s high school curriculum.”
— Andrew Hallam
Watch an interview with Rick Van Ness — a virtual book tour. 🙂
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I do not know if it’s just me or if everybody else encountering issues with your website.
It seems like some of the text in your posts are running off the screen. Can someone else please
provide feedback and let me know if this is happening to them too?
This may be a issue with my browser because I’ve had this happen before.
Many thanks
Hello, I wish for to subscribe for this web
site to obtain newest updates, so where can i do it please
help.
Hi Valeri, click on the “Guide To Subscribing” button on the primary menu. There is a form there where you can leave your email and get an update when I post new content (approximately every month). If you have any trouble, shoot me an email. Thanks. Rick
https://financinglife.org
I have been investing in stocks up until now and would like to understand the benefits of investing in bond markets.
Today the raffle is over and I’m shipping the last prizes. Both the paperback and kindle versions are enjoying high praise on AMAZON and have been the #1 in several categories all month. If you didn’t win a free book, please consider buying it now for the very modest price on Amazon. Enjoy. Learn lots. Then share what you learn with your friends and family.
I would love to know how to invest in bonds and why to bother with bonds.
Welcome. You’ve come to the right place. Enjoy the book.
My wife and I are in our late 20’s and currently saving 35%+ of our income entirely in equties due to our time frame. I picked this up as an ebook from Amazon looking for the counter point argument after I saw it posted on bogleheads. While I am not totaly convinced to change my IPS/AA, it has given me alot to think about.
Thanks. 100% equities might be fine for some people who don’t need this money for 30+ years. Only you can decide whether that is right for you. It is easy to think you are risk tolerant when the stock market is setting frequent new record highs. But, if you were invested in the big plunge seven years ago, then you have some insight about how you will react next time.
I’d like to understand more about the different types of bonds, and how duration and interest rate changes impact the value of bond funds
Excellent question. All are addressed in my book. Enjoy, then share what you learn with your friends and family.
Clear Vanguard mutual fund selections
Well, I don’t recommend specific funds, but I do talk about how to recognize a good fund and show some example portfolios.
I’d love to know more about how Bonds work!
Excellent! I hope you learn how simple they are, and the all-too-common mistakes people make.
I’m more interested in preservation than growth at this point in my life so I look forward to your bond book.
BINGO. That’s the role for bonds. But how much of your portfolio to allocate to bonds? And whether to choose short-term or intermediate- or long-term? These are ways I think the book will help you.
I really appreciate all your time and efforts
in helping others understand the basic strategies for investing. Your videos are very helpful. I have sent links to family and friends.
I would appreciate your input on TIPS . Do think people invest in TIPS (given the current low rates) or opt for a Bond [Intermediate] Index Fund?
You cannot know whether TIPS or nominal bonds will be better – the answer depends on future inflation rates, not future interest rates. I do explain how nominal bonds compensate you for what the market anticipates inflation will be, and how TIPS protect you from UNEXPECTED inflation. Your question is hard because we can’t know the future. Consequently, some people choose to own half nominal bonds and half TIPS. Others opportunistically buy predominantly TIPS when they are at attractive rates (say, above 2%). You might enjoy a small excellent book called Explore TIPS, or follow his blog at thefinancebuff.com .
What will happen to bonds if interest rates ever go up?
The value of the bond will go down. This is simply arithmetic. BUT WAIT! Don’t jump to the conclusion that rising interest rates are a bad thing. You need to learn about “duration” and consider when you will need the money.
I’d like to verify that I’m doing the right thing with my bond allocation vs. stocks.
Excellent. This is so very important! On the other hand, don’t look for precision. You can only know the “best” allocation in hindsight. Strive to get close (maybe within 10%). It’s more important that you can stick with your decision.
I have a lot to learn about bonds, so I need to start somewhere.
Welcome! We all need to start with wherever we are, and the good news is that you don’t need to get fancy!
New to investing and wanting to learn the basics of bonds and their role in a portfolio
Welcome! Stick around. 🙂
I want to understand why bonds are worth it.
Several others are wondering this also. I hope you’ll learn that owning the correct amount of bonds are for when the alternatives (100$% stocks or 100% cash) are inappropriate. It’s all about the risk of not having the money you need, when you need it.
Just found and read your book “Common sense investing” It is the best book on basic investing that I have come across. Very readable, great explanations. Thank you for your website. I hope it will motivate me to actually start investing as Ive been sitting on the sidelines for way too long!
Thanks! Yes, start now. Start with wherever you are today. Compound interest is the miracle that allows many of us to retire comfortably. Learn how to harness this, then encourage your friends to take control of their finances also.
My company doesn’t match with the 401k they offer so I’m trying to setup my own retirement portfolio. Just trying to find out where to begin.
Great! Stick around. We try to help folks like you.
I want to understand why I should bother with bonds in this extremely low rate environment.
It’s for when the alternatives (100% stocks or 100% cash) are inappropriate.
I already showed your videos to my spouse and 13 year old kid ,who already finished underlining your common sense on investing ,now both want a hard copy of WHY BOTHER WITH BONDS ,after seeing your video ,thanks to rick van ness ,making investing so simple for my spouse and kid ,next we all want a book on retirement planning and quest for alpha. DR ANIL GUPTA MD (NEW-YORK) cardiologist /boglehead /rickvannesshead.
Wow! That 13-year old has a great Dad. The perfect place to learn about basic personal finance is in the home.
Bond funds make me nervous given that interest rates will eventually increase. While I don’t time the stock market, I have fallen into timing the bond market by focusing on I-Bonds, cash, guaranteed income, and short term bond funds as my only fixed income.
If your bonds are a long-term investment, then you might want to learn about “duration” as the length of time when you become indifferent to a rise in interest rates. If you hold them longer, the rise in interest rates benefits you. Enjoy the book.
Just want to understand and learn how bonds work. I gave a copy of the Common Sense Investing book to my grandsons.
Excellent! Seems fitting to hear common sense from grandma!
Thanks a lot for your great website and videos.
Why bonds are still good investment vehicle at this time when current interest rate is low?
Thanks! I hope you’ll learn that your bond allocation should be maintained to control your level of risk—independently of interest rate and stock market swings.
thanks Rick, I’m curious as to what you have to say about bonds because I just took a course at church by Dave Ramsey and he says no to bonds. I was a little surprised.
OK, at a glance I can see that the Dave Ramsey investment philosophy is totally different from the common sense investment philosophy that you’ll hear from John Bogle. I unequivocably ascribe to the latter. Perhaps there are parts of Dave’s thinking that I’d agree with. For instance, I would recommend against owning individual stocks, and I would only recommend owning individual bonds that are either U.S. Treasuries or FDIC-insured CDs.
Your new book annoucement could not be more timely! Just took a look at my portfolio this morning and wondered about my bond allocation. Thanks for the great work and generosity of sharing your knowledge. Looking forward to read your new book!
Good for you! Enjoy the book.
Common Sense Investing is my go-to book I recommend to individuals that want to learn about investing. I hope this book demystifies bonds for me.
Thanks! That was my goal.
I understand that bonds are safer investments – but interest rates are so low, I still don’t understand why they are worth my time – right now!
Are bonds “worth your time”? Well that all depends on when you need some of the money and what you would do if (when) stocks head south again before you satisfy your need. The book will show you that it’s all about controlling risk so that the money is there when you need it. If you will never need it you could be 100% stocks – but these situations are rare.
Came across the YouTube channel right after developing an interest for investing, and it has been a wealth of knowledge so far! Every video covers significant ground while being simple and easy to understand. I am looking forward to delving into the books now.
Great. Thanks for watching.
Should I invest in mutual funds, or attempt to invest in individual bonds?
The only individual bonds you should consider are U.S. Treasuries (both nominal and inflation protected types: TIPS or I Bonds) or government insured CDs. Otherwise, you’ll likely find bond mutual funds are safer and cheaper. The book explains this and suggests the strategy of keeping investment risk on the stock side of your portfolio.
Want to expand my horizon on fixed income alternatives
Bravo! These are basic personal finance principles that everyone should learn.
I’d like to understand how Bonds work and what to do with them.
Excellent! Enjoy the book!
I just viewed your “bond” videos on the youtube channel (which are very helpful) and what to read additional about bond investing. Thank you.
Thanks for watching!
I would like to learn why bonds are a good investment today when interest rates are so low?
It is true that the expected return on stocks is higher. The reason bonds might belong in your portfolio is if you need some of that money in a reasonably short timeframe, or if you might be tempted to sell after the stock market takes its next plunge.
I want to learn if Treasury Inflation Protected Securities (TIPS) is enough or I’d be better off with a total bond market index fund?
I do explain how nominal bonds compensate you for what the market anticipates inflation will be, and how TIPS protect you from UNEXPECTED inflation. Your question is hard because we can’t know the future. Consequently, some people choose to own half nominal bonds and half TIPS. Others opportunistically buy predominantly TIPS when they are at attractive rates (say, above 2%). If this is your primary concern I’d like to suggest a small excellent book called Explore TIPS, or follow his blog at thefinancebuff.com .
I’m looking forward to reading your second book!
I want to learn the pros and cons re. buying individual bonds vs a mutual bond fund.
Using mutual funds is going to be the best choice—certainly the most convenient—for nearly everybody. I do have a chapter highlighting five situations where some very specific kinds of individual bonds can prevail over bond funds, but beginners can safely skip that chapter.
I JUST FINISHED READING COMMON SENSE INVESTING BY RICK VAN NESS, I HIGHLY RECOMMEND THIS BOOK TO EVERY INVESTOR.I GIFTED COPIES OF THIS BOOK TO MY RELATIVES,KIDS AND FRIENDS , WAITING FOR WHY BOTHER WITH BONDS,as first investor should focus on bond index fund allocation 50% than increase 1% bond on every birth day..bonds are like a lifeboat ,first search for a proper life boat than sing other wise you will sink. DR ANIL GUPTA MD ,cardiologist
Thank you for saying that! You just made my day. 🙂
I have always had an interest in bonds and want more safety from the ups and downs in the stock market.
Perfect. Bonds complement stocks in just this way—although, used correctly, you’ll find them b-o-r-i-n-g. And that’s a good thing.
I’d like learn why to bother with bonds.
Great! The short answer is: “to control risk”. Enjoy the book.