How To Keep & Grow Your Money #15

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In this letter, we analyze the iShares 20+ Year Treasury Bond ETF (TLT).

Ticker: TLT | Price: $92.09 | Market Cap: $59.1B | Average 10-Year Annual Return: 0.7% (as of October 2024).

What is it (short): The iShares 20+ Year Treasury Bond ETF, also known as TLT, is an exchange-traded fund that aims to track the performance of U.S. Treasury bonds with maturities of 20 years or more. This ETF provides exposure to long-term government bonds, appealing to investors looking for stability and income.

What is it (long): TLT is designed for investors seeking to benefit from U.S. government bonds with extended maturity dates, which are known to be sensitive to interest rate fluctuations. It holds a diversified portfolio of long-term Treasuries, making it a popular choice for investors wanting to hedge against stock market volatility or those expecting interest rates to decline, as bond prices typically increase when rates fall. However, TLT’s price can be more volatile than short-term bond ETFs due to its long-duration holdings.

Our thoughts: TLT may suit investors looking for income through government-backed bonds or those aiming to protect against equity market downturns. Due to its long-term focus, it is sensitive to interest rate changes, so investors should be aware of this risk. This ETF can provide a stabilizing element in portfolios but may yield significantly lower returns compared to equity investments over long periods.

Do your own research and if you would like to take our free course to learn how to invest into ETFs and Index Funds at Index Institution™ go here.

Best Places to Retire or Live as a Nomad in Asia?

A lot of people reading this might be entering retirement age soon or are simple financially free to choose where they live.

So here’s a quick guide to some of the top retirement destinations in Asia. Each offers unique perks that cater to different retirement lifestyles:

1. Thailand: Known for its affordable living, welcoming locals, and diverse landscapes, Thailand appeals with cities like Bangkok and the more tranquil Chiang Mai. Retirees need a Non-Immigrant O-A Visa or can apply for the long-term Thai Elite Visa.

2. Vietnam: Offering a mix of rich culture and affordability, Vietnam is a favorite, with options to live in bustling cities like Ho Chi Minh or scenic coastal areas. Though it lacks a direct retirement visa, options like the DT Investor Visa cater to long-term stays.

3. Indonesia: For beach lovers, Bali in Indonesia stands out. With its recent introduction of a five-year Retirement Visa, Indonesia appeals to retirees who value stunning landscapes and a laid-back lifestyle. However, the retirement visa has some financial prerequisites, such as a stable pension.

4. Malaysia: Attracting retirees for its natural beauty and affordable healthcare, Malaysia offers the Malaysia My Second Home (MM2H) program, allowing expats to live long-term with an initial ten-year visa. Cities like Kuala Lumpur offer a blend of modern amenities and cultural diversity.

5. Singapore: Known for its high standard of living, safety, and top-notch healthcare, Singapore is popular with retirees seeking an urban, cosmopolitan environment. Although it has a higher cost of living, it provides excellent transport and easy access to the rest of Southeast Asia.

These destinations offer different experiences, whether you’re after city life, beach relaxation, or cultural immersion. Each has distinct residency requirements, making it easy to find a spot that matches your retirement or nomadic goals.

If you would like to explore legally paying less taxes and maximizing your freedom check out Global Optimizer™ or click here.

Financial concept to learn in this edition: Bonds

What Are Bonds and Why Are They Important for Investing?

• Definition: Bonds are loans investors give to entities (like governments or corporations) that pay periodic interest and return the principal at maturity.

• Types of Bonds: Government, corporate, and municipal bonds vary in risk and returns.

• Why Investors Use Bonds: Bonds are key for income, stability, and diversification, often offsetting stock market risks.

• Interest Rate Impact: Bond prices fall when interest rates rise and rise when rates fall, especially for long-term bonds.

• What to Consider When Investing in Bonds

  1. Interest Rate Environment: Rising rates can lower bond prices, so understanding current and projected interest trends is essential.

  2. Credit Risk: Corporate and municipal bonds carry default risks. Check bond ratings (e.g., from Moody’s or S&P) to gauge reliability.

  3. Maturity: Short-term bonds are less affected by rate changes, while long-term bonds offer higher yields but also higher sensitivity to rate shifts.

  4. Diversification and Risk Management: Bonds provide stability in a portfolio and reduce overall risk, as they tend to perform differently than stocks, especially during market downturns

Why Bonds Matter

Bonds are valuable for income generation, risk diversification, and capital preservation. For conservative or retired investors, bonds provide predictable income with lower volatility than stocks. In a balanced portfolio, they help manage risk and stabilize returns, especially during economic uncertainty or downturns.

Bonds add balance to portfolios, reducing risk, especially in market downturns.

To learn more about Bonds read more on Investopedia here or learn more on how to invest here.