No. of Recommendations: 2
As always, Lokicious makes excellent points.

However, Loki's perspective is valid for a long bond investor, like many (perhaps most) of us, on this board, not for speculation.

I believe that, as a speculative play, a long-bond index fund would be a safer play, than buying individual long bonds.

Loki focuses on the fact that, if you hold to maturity, you will always get your principal back from individual bonds, while a bond fund has no maturity date. Therefore, you could lose money, in a fund, if bond rates were to rise (the NAV would fall, if interest rates rise).

However, you have made it clear that your goal is to speculate on interest rates. I understand this to mean that you would like to take advantage of interest movements, by moving in and out of the market...moving in now, when you think that interest rates are relatively high, and moving out, when they drop, and the value of the bonds rise, to achieve a capital gain.

Buying and selling individual bonds costs commissions. If you don't want to pay, to buy and sell, you could hold to maturity...but, by definition, the long bonds would take a LONNNGGGG time to mature. During this time, inflation might resurge, and the value of the bond might drop, so you would have to hold to maturity, to get your principal. You might not want to lock up your money.

However, buying a low-cost index fund, such as from, avoids commissions. You have flexibility, to buy and sell, whenever you want.

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