Welcome to the Stay Wealthy podcast. I'm your host Taylor Schulte, and today I'm sharing

part two of our four-part series on investing in bonds. Specifically, I'm going to dive into

the two ways you can generate higher expected returns in the bond market. And as always, the information I'm sharing

is based on decades of academic research and not a crystal ball. So if you've been blindly

buying bonds and still not exactly sure what you own and how they're contributing to your

portfolio, today's episode is for you. For all the links and resources mentioned, head over to

you staywealthy.com forward slash 86. Similar to stocks, bonds also have known sources or drivers of

higher expected returns. As a reminder, with stocks, there are four drivers of higher

expected returns, which we covered last month in episode number 83. And those four drivers were

market, company size, relative price, and profitability. And although the bond market is known to be

more complex, there are really only two main drivers to increase

expected returns. And technically, there's a third, but we'll save that for another episode.

So the two main drivers of bond returns are term and credit. And thankfully, they're both pretty

easy and straightforward to understand. In fact, today's entire episode is going to be pretty easy and straightforward. I'm going to be laying the

foundation for some more technical concepts, which we'll get into in part three and four of

this series later this month. So let's start with term, or what's also referred to as the

term premium. The word term simply refers to the maturity date of the bond.

Similar to a bank CD, which I think all of us are familiar with,

you might buy a bond that matures in one year, five years, or maybe 10 years, or something in

between.

And just like a bank CD, the longer the maturity date, the higher

the interest rate you would expect to receive. In other words, if we're looking at two identical

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