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Started by sfpf, August 18, 2018, 04:50:05 PM
QuoteCan you explain how you invest in bonds? It sounds like you are purchasing directly, because bond funds can lose money in a rising interest rate environment due to duration risk.
QuoteHow would you adjust this if you were in your early-to-mid 20s, with a 30 year retirement horizon.
Quote from: Eric on September 10, 2018, 04:36:29 PMFor Fixed Income - this is where managed funds work very well. Dollar for dollar, trading bonds is much more expensive than trading stock. Lack of exchanges, basic electronic trading and a lot of the market still being traded over voice (for sizeable trades) are key deterrents.Outside of government bonds, and particular for corporate bonds/credit using a fund manager makes a lot of sense. New issue bonds (which occurs much more frequently than IPOs for stocks due to fixed vs indefinite maturities) generally carry new issue premiums, and these bonds are allocated almost exclusively to professional/non-retail investors. This makes it easy for bond funds to outperform the index, and outperform an individual trying to build the same portfolio. For US treasuries - best way to buy them is direct. However, there aren't many cases where it really makes more sense to buy treasuries than invest in a high yielding bank CD- particularly as banks are much more sound now than 10 years ago.https://www.treasurydirect.gov/indiv/research/indepth/tbonds/res_tbond_buy.htm