Uploaded June 2020 | Updated September 2026, 1 day ago
Fixed income securities these are the type of securities that you get an interest payment from. The payment is normally decided by the issuer issuing the security I say issuer because its not only companies that issue fixed income securities even countries do, so it can be every three month or it can be every 6 months depending on what they can handle or the type of instrument that you have. Because you can invest in a repo that you can have for a day or even a year.
Repo or repurchase agreement which is a short term fixed income security now the reason its called short term is because it is not normally held for more than a year and even one year is a long period for a repo. For the short-term securities, we can have a treasury bill, repo commercial papers or a certificate of deposit.
Treasury bills in Jamaica are issued by the government an last for either 90 days or 180 days. When you buy a treasury bill you buy it at a discount. What this means is that if you plan to buy 10000 worth of treasury bill then you would pay lets say 9500 for it. How you make your money is when the 90 or 180 days is up the government is going to pay you 10000 so you just made 500. The interest rates for short term securities are normally very low so is usually companies use them so they can monitor their cashflow.
With repo’s what you do is to lend your money to a company not a person that own a particular bond normally government bonds. Now once the time expire they have to buy the bond back. So this is where you get back your money plus the interest that you agreed on.
Commercial Paper these are a bit different because you lend a company your money but you don’t have anything to secure it so if the company fail you can lose your money. That why if you are investing in commercial papers you make sure the company is one that is very strong cant just lend you money to anybody.
With certificates of deposit or CD’s you go to the bank and tell them you want to deposit the money for a period of time and they will give you an interest rate for the period based on the contract.
Now why people like these types of investments is because they are generally safe and if you need your money it easy to get it back. Plus it better than just putting your money in the bank and waiting for interest from your savings account. You also have a bad side too because when you come to an understanding with the institution and a time is set if you need your money before the contract close then you can incur penalties. Plus inflation might go up or the institution can just not be able to pay so they default is the term.
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All the instruments that we just talked about are short term now for a medium to long term instrument we would buy bonds because these are normally for 2-30 years. As I said before bonds normally pay interest at intervals so like every 3 months or every 6 months. They also have a maturity date, this is the date that you should get back your money from whoever you lent it to but if the bond is on the market then you can actually trade it so you can sell it before it mature depending on what you want or how your portfolio set up. As with all fixed income security you need to pay attention to the credit rating of whoever you are lending your money to because you have what are called junk bonds these are from companies who always a default people have problems getting back their money but they always offer very good rates because the are basically paying for the bad reputation that they have.
When you buying bonds a couple of things you pay attention to are Face value this is the amount you get back if the bond mature so if the face is 100k that is what you getting back when it mature. The principal is different because it is based on the price that you paid for the bond so if you bought 100k bond at 101 because the prices go up and down based on the market then the principal is 101k so you paid a premium of 1k. Coupon this is the interest that you get from owning the bond it is normally at a percentage so like a 5% rate per year.
There are a number of different bonds like index bonds, government bonds these can be both local currency and foreign, you also have global bonds corporate bonds convertible bonds and so on.
#jamieradcliffe #bonds #tbills
Thanks for Watching. Here are some of my other videos
Business on a budget - youtu.be/t3hiUJqbkSk
5 Things I learned on my first investment - youtube.com/watch?v=JwvGR_KDYzY&t=01s
Starting your Business - youtu.be/k5yjHpD_k0U
Disclaimer: All views expressed here are my personal opinions, and intended for educational purposes only.
Fixed income securities these are the type of securities that you get an interest payment from. The payment is normally decided by the issuer issuing the security I say issuer because its not only companies that issue fixed income securities even countries do, so it can be every three month or it can be every 6 months depending on what they can handle or the type of instrument that you have. Because you can invest in a repo that you can have for a day or even a year.
Repo or repurchase agreement which is a short term fixed income security now the reason its called short term is because it is not normally held for more than a year and even one year is a long period for a repo. For the short-term securities, we can have a treasury bill, repo commercial papers or a certificate of deposit.
Treasury bills in Jamaica are issued by the government an last for either 90 days or 180 days. When you buy a treasury bill you buy it at a discount. What this means is that if you plan to buy 10000 worth of treasury bill then you would pay lets say 9500 for it. How you make your money is when the 90 or 180 days is up the government is going to pay you 10000 so you just made 500. The interest rates for short term securities are normally very low so is usually companies use them so they can monitor their cashflow.
With repo’s what you do is to lend your money to a company not a person that own a particular bond normally government bonds. Now once the time expire they have to buy the bond back. So this is where you get back your money plus the interest that you agreed on.
Commercial Paper these are a bit different because you lend a company your money but you don’t have anything to secure it so if the company fail you can lose your money. That why if you are investing in commercial papers you make sure the company is one that is very strong cant just lend you money to anybody.
With certificates of deposit or CD’s you go to the bank and tell them you want to deposit the money for a period of time and they will give you an interest rate for the period based on the contract.
Now why people like these types of investments is because they are generally safe and if you need your money it easy to get it back. Plus it better than just putting your money in the bank and waiting for interest from your savings account. You also have a bad side too because when you come to an understanding with the institution and a time is set if you need your money before the contract close then you can incur penalties. Plus inflation might go up or the institution can just not be able to pay so they default is the term.
Connect with me on social media
Instagram: bit.ly/2YdEjk2
Twitter : bit.ly/3cHgLtg
All the instruments that we just talked about are short term now for a medium to long term instrument we would buy bonds because these are normally for 2-30 years. As I said before bonds normally pay interest at intervals so like every 3 months or every 6 months. They also have a maturity date, this is the date that you should get back your money from whoever you lent it to but if the bond is on the market then you can actually trade it so you can sell it before it mature depending on what you want or how your portfolio set up. As with all fixed income security you need to pay attention to the credit rating of whoever you are lending your money to because you have what are called junk bonds these are from companies who always a default people have problems getting back their money but they always offer very good rates because the are basically paying for the bad reputation that they have.
When you buying bonds a couple of things you pay attention to are Face value this is the amount you get back if the bond mature so if the face is 100k that is what you getting back when it mature. The principal is different because it is based on the price that you paid for the bond so if you bought 100k bond at 101 because the prices go up and down based on the market then the principal is 101k so you paid a premium of 1k. Coupon this is the interest that you get from owning the bond it is normally at a percentage so like a 5% rate per year.
There are a number of different bonds like index bonds, government bonds these can be both local currency and foreign, you also have global bonds corporate bonds convertible bonds and so on.
#jamieradcliffe #bonds #tbills
Thanks for Watching. Here are some of my other videos
Business on a budget - youtu.be/t3hiUJqbkSk
5 Things I learned on my first investment - youtube.com/watch?v=JwvGR_KDYzY&t=01s
Starting your Business - youtu.be/k5yjHpD_k0U
Disclaimer: All views expressed here are my personal opinions, and intended for educational purposes only.
