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re: Bonds. Explanation needed.
Posted on 5/5/15 at 9:05 am to bayoubengals88
Posted on 5/5/15 at 9:05 am to bayoubengals88
quote:
You're right. I'm now pro index funds or high yield ETFs having gotten out of all my blue chips.
I am just curious about opening up a small bond position at some point.
Just remember the price of the bond is only relevant if you plan on trading it. If you expect your children to go to college in 20 years and get a 20 year bond, you will get the entire amount in 20 years. If interest rates increase, they will sell for less if you need to get your money out in 10 years, but you will be given the actual amount you expected if you hold till maturity. It's just relatively less desirable if interest rates in the market are higher.
ex: why would I buy a bond with a 4% interest rate when the going rate is 6%?
This post was edited on 5/5/15 at 9:06 am
1
Posted on 5/5/15 at 9:17 am to SouthOfSouth
quote:So buying a long term bond is always a complete guess?
ex: why would I buy a bond with a 4% interest rate when the going rate is 6%?
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