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Plain-English explainers

Explained

The ideas behind each issue, in plain words.

Rates & the curve

Market value vs the curveMarket value is what a bond is worth if you sell it today, and it moves up and down with the market's mood. The curve is the return you locked in when you bought, building steadily toward maturity, where the price finally lands no matter the bumps along the way, as long as the issuer pays.
DurationDuration is basically how sensitive a bond's price is to a move in interest rates. It tracks the time to maturity and the schedule of payments.

Fixed income & credit

Coupon vs your contracted rateThe coupon (the interest the bond pays you on a schedule) is one thing; the rate you locked in when you bought is another.
Reinvestment riskReinvestment risk is basically the chance that, when a bond matures, you cannot put the money back to work at rates anywhere near today's.
Accumulation vs distribution fundsTwo versions of the same fund: a distribution class pays income into your account on a schedule; an accumulation class reinvests it automatically and grows the price instead.
Credit rating and subordinationA credit rating (from agencies like S&P, Moody's, Fitch) is just their read on how likely a company is to pay you back, based on public information. Subordination is where you stand in line to be paid if the company defaults.
Lock-in vs optionalityLock-in means committing to tie your money up for a set time; optionality means keeping it liquid so you can move when something comes up.

FX & cross-border

Currency vs the basketYour money's value is not fixed. Two forces move it, and one is almost always working against you. First, exchange rates: you can earn well in dollars, but if you spend in francs and the dollar weakens, you lost purchasing power. Second, inflation, which eats your purchasing power over time unless your assets at least keep pace with it.

Inflation

Headline vs your personal inflationAn inflation index is a basket of prices meant to show, broadly, how the cost of living is moving for the population. It is basically an average, and it does not match anyone's real, personal inflation.

Central banks

Why the Fed sets the world's rateWhen the largest economy's central bank moves rates, almost every other market has to follow. US Treasuries are still treated as the safest asset in the world, so when the US pays more to hold them, money would rather sit there than take big risk for a little extra.

Equities & returns

Time in market vs timing the marketPicking a strategy and sticking with it usually beats trying to guess the moment to switch every time a new headline lands.

Rates & the curve

Market value vs the curve

Market value is what a bond is worth if you sell it today, and it moves up and down with the market's mood. The curve is the return you locked in when you bought, building steadily toward maturity, where the price finally lands no matter the bumps along the way, as long as the issuer pays.

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