I've about 50K cash in my account earning almost nothing. My friend keeps telling me to buy PHK as it has almost 12% yield and made up of different bonds so lesser risk than stocks. My idea is to use this cash incase of emergency only or when market dips and I need cash. I'm willing to take 5-10% dip with this and he thinks when equity goes down bonds usually go up or go down much lesser than stocks. Any advise or suggestion?
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It's too good to be true. My friend's argument is that it kept paying 12C/share every month even through worst market of 2008-2009 despite the price drop of 70%. He has obviously done well holding for past seven years but I do not think it's right for me to jump in at current share price.
Emergency funds should be in an insured savings account or CD. I wouldn't recommend it being considered as an investment. It's there so you don't have to sell investments when the market is down and you have an emergency.
Unlike treasuries and muni bonds, PHK will likely move with the stock market. It has a high expense ratio of 1.05%. I would not buy. I would certainly advise against using as an emergency fund holding. When the next emergency hits, the money may not be there.
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