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iShares 20+ Year Treasury Bond ETF logo
iShares 20+ Year Treasury Bond ETF
US4642874329
TLT
TLT

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est 4.
@user541bd08ad7c94f17
10Mon·
Portfolio Feedback

Good day.

I am now publishing my portfolio for the second time, a few things have changed. I am 19 years old and started investing in October last year. I was a student until july this year and have been working since august. That's why I can invest 500 per month. From January I have to go into the military, from then on I will earn correspondingly less for the first 124 days, the remaining 176 days it will be gross about as much as now net. I'll see how much I can invest during this time. I sold my core position $VWRL (-0.22%) I have sold in order to shift the money into the $TLT to shift the money into the The idea behind this is that if interest rates fall with a recession, I will still make a profit. The overall loss is actually higher than with getquin due to many mistakes made by beginners such as selling small bad investments with too high fees.

I look forward to your assessment and opinion on my portfolio.

Have a good trading day

Check out my Dashboard now!
2 Comments
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DerMartin@DerMartin
10Mon
You have linked the wrong security.
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Show answer
Hans J.
@FFH
1Yr·

Good morning (-:

I would like to start a discussion about the $TLT because I don't think I have understood the principle behind it yet. In simple terms: this is an ETF which invests in a part of the 20 year government bonds of the USA.


A few assumptions:


  • if the interest rate continues to rise in the USA, will the price of the ETF fall because the "old government bonds" are not as attractive as the new ones?
  • what happens if the interest rate stays the same, the price should not fluctuate much, except when the stock market weakens and bonds become more attractive?
  • if the interest rate goes down, the price should go up because the old bonds have a better yield than the new ones? Equally, however, stocks become more attractive again and compete?
  • the ETF itself has a payout rate of currently between 3-4%, when is that paid out (semi-annually, in January?) - does the price then fall accordingly - the chart does not look that way


Looking forward to the discussion.

Kind regards


1
5 Comments
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Rmann@Epi
1Yr
You seem to think of bonds in a similar way to stocks. But they work a little differently. TLT invests in US government bonds with a maturity of over 20 years. So that includes 30 year ones. The bonds are never held to maturity, but are exchanged for new long-dated ones beforehand. 2. The price of the bonds is essentially determined (with a somewhat complicated calculation that takes into account inflation and prime rates, for example) by the expected interest income over the next 20+ years. I.e. you basically have 20+ leverage on expected interest rates. If they rise, the price of the bonds, and thus of the ETF, falls. 3. If the expected interest rates remain the same, nothing will happen to the bonds. If the current key interest rates remain the same, this says nothing about the changes in expectations. 4. A bond does not fall in price due to coupon payments. So neither does a distributing ETF. Accordingly, an accumulating ETF rises by the distributions. In most cases, reinvesting bond ETFs are also somewhat more expensive than distributing ETFs. 5. If you want interest payments, a $XEOD is currently more attractive because of the inverted yield curve.
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