 Quote:
|
However, be sure you understand the difference between individual bonds and bond funds before buying one. * They are quite different. *In fact it would be interesting if anyone has studies on the impact of each when studying asset allocation.
|
Wayne, I don't know of any studies, but I prefer individual TIPS. My thinking is that with funds, I'm continually exposed to interest rate/inflation risk. So if coupon payments go to almost zero, that's where I'll go too if I'm in a fund. I'm totally exposed. But with individual bonds I can lock in around 2.5% for twenty-five years if I hold to maturity. If rates go up dramatically, I lose, but since I'm planning to hold until maturity, I won't realize any losses at all. My purpose is not to make money, but to lock in a real rate of return to pay the bills, so I think I'm far better off with individual bonds than with a fund. Thoughts anyone? Am I missing something in my thinking?
|