DJH Capital Management, LLC.
Financial Planner | Wealth Advisor
Dominique J. Henderson, Sr. began serving in the financial industry in 1998. He is founder and managing member of DJH Capital Management, LLC. a registered investment advisory firm providing comprehensive financial planning and wealth management to high-net worth individuals and entrepreneurs.
Professionally, Dominique has spent nearly two decades in financial services building a diverse skill set in data analysis, investment research, portfolio management and financial planning. Prior to founding his firm, he spent years in institutional fixed income trading circles where he co-managed a multi-million dollar municipal bond strategy producing annualized returns in excess of 7%.
Dominique uses his expertise to build financial plans and investment portfolios that help his clients find greater financial contentment in their lives. He crafts custom plans to meet the diverse needs of each client in investment, tax, or estate planning. He deeply desires to see people “win” with their hard-earned capital.
Dominique’s financial advice has been featured in such publications as US News & World Report, GoBankingRates.com as well as, as his weekly podcast, The Financial Literacy Boot Camp. He uses the boot camp as a medium to help educate his clients and increase financial literacy in the investing public.
Dominique is also an active member of the Financial Planning Association (FPA) and the National Association of Personal Financial Advisors (NAPFA).
Master of Security Analysis & Portfolio Management, Creighton University
BA, Finance, Prairie View A&M University
Assets Under Management:
The Not So Obvious Benefits of your 401(k)
The Key to Financial Contentment
Aligning Your Money with Your Values-Part 1
The Fundamentals of Investing
Thanks for your question.
I’d suggest the following:
1) Develop a goals plan of what you want to accomplish in the next 1, 3, and 5 year increments;
2) See how much of your income each of those goals will take;
3) Focus on the ways you can manage your expectations without incurring too much debt;
4) Find someone that will hold you accountable to your goals plan
Step 3 is the “multi-step” part of the process in which you will need to focus on increasing your skills so you can increase your income from $10,800 per year. You likely already understand this and I’m sure you are considering ways to change this situation. I’d focus on how you can provide for your essential needs while not incurring any unnecessary debt. For example, this may mean you buy a car for cash instead of taking out a car loan.
Good luck and I hope this helps!
Really good question. The answer (is probably as you have guessed)...it depends.
Some quick things about bonds:
- Bonds are priced based on relative value to a particular spread;
- Bond yields are typically more important than it's price
Knowing this, we can better answer the question.
High yield bonds are an asset class of fixed income that are rated below investment grade for by credit ratings agencies. Although, the bond (as an investment instrument) represents a claim on company assets that is in greater priority than stocks, the probability of default for the company (e.g. creditor) is greater the lower the credit rating. So as an investment, several aspects of the target company's financials should be analyzed before making a decision.
So say you've gotten comfortable with credit quality of the target company's bonds and feel that the risk you're taking for a lower credit quality asset properly reflects the return you hope to receive. Then you would look at whether the level of benchmark interest rates (e.g. yields) versus the yield of a target investment (AKA "the spread") represents a good value. The key is the wider the better.
Yield on 10 year Treasury = 1.75%
Yield on 10 year High Yield Bond = 6.5%
Current Spread =475 bps
20 year average Spread = 300 bps
Based on the current spread you can see that you are receiving more return for the same risk based on history. Once understood, this formula can be applied to all types of bonds within different sectors and industry groupings.
I hope this helps!
P.S. Bond investing for the average investor can be a fairly daunting task, but here are some additional resources for you:
Investing in Bonds sponsored by SIFMA
This really depends on if you are the “borrower of funds” or the “lender of funds”.
For the borrower…this is an ideal situation because instead of paying interest for borrowing funds you are receiving interest. You still have the principal to pay back but effectively the interest you collect reduces the amount you will have to pay back. Think of a reverse mortgage of sorts.
For the lender of funds…this destroys your rate of return for the investment of funds. Instead of receiving interest for the funds you lend you, will pay interest. In my opinion, this defeats the purpose of investing in the first place and is not advisable.
Negative bond yields in a global text is a situation where central banks have effected policy that essentially forces consumers to use more credit. An easy monetary policy is designed to induce further spending to stimulate growth, so negative interest rate policy (“NIRP) is designed to exacerbate that effect.
The 30% stake you are being offered should be on the 2015 sales price/valuation not on the 2009 sales price/valuation. Your concern would be to analyze if that is the case. When you finally sell, keep in mind that your adjusted basis will be subtracted from any sales price [to figure capital gains]. The capital gains realized from 2009 until 2015 cannot be “re-taxed” for new owners.
I hope that helps.
This ratio is an indication of the relative value of a stock. The lower (non negative number) the better. But, let's breakdown the components of that ratio to answer your question:
PEG Ratio = P/E Ratio/Annual EPS Growth Rate
The P/E ratio is the price to earning ratio reflecting the amount you are paying for every dollar of the company's earnings (e.g. earnings per share). This is often called the P/E multiple. For example, a P/E ratio of 15.0 represents paying $15 (in stock price) for every dollar in annual earnings per share.
Annual EPS Growth is just the rate of growth of earnings per share.
So, assuming a company grows earnings faster than the price reflects this growth, you get a lower PEG ratio. For example, if Company A grows earnings at 30%, and has a P/E ratio of 15 versus Company B that grows earnings at 30%, and has a P/E Ratio of 45; Company A would be a better value because for the same growth rate in earnings, you are getting a better deal in that the growth hasn't been reflected in the price.
Note: PEG Ratio is just one of several metrics to consider when evaluating a stock.
Hopefully this helps!