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Author: elambeth One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75379  
Subject: Junk bonds: appropriate for long term investing? Date: 8/27/2000 3:15 PM
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I'm in my early 20s, very risk-tolerant, and am looking for a few ultra-aggressive investments for my IRA.

So far, I've got some biotech stocks, some internet stocks, and an emerging markets mutual fund. This is just about the most aggressive collection of investments I can think of. (my 401k is all in the S&P500 index so I feel I can go further afield with my IRA.)

Anyway, I'm considering adding one more investment: Junk bonds. But I'm not sure if these are appropriate for me. On the one hand, I've heard that they behave like equities and are considered "aggressive," unlike most bonds. On the other hand, I see that even the best junk bond funds over the last 10 years have an annualized return of 10%-12%... not that impressive.

So are these appropriate for an aggressive investor with a 30-year horizon? Or would I be better served by putting the money into stocks?
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Author: Mark0Young Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 24385 of 75379
Subject: Re: Junk bonds: appropriate for long term invest Date: 8/27/2000 3:38 PM
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On the one hand, I've heard that they behave like equities and are considered "aggressive," unlike most bonds. On the other hand, I see that even the best junk bond funds over the last 10 years have an annualized return of 10%-12%... not that impressive.

"High yield" (junk) Bond funds may be considered "aggressive" when compared to other bond funds (they take on more risk by buying bonds from companies with low credit ratings), but they are not considered as aggressive as conservative stock funds.

For an aggressive investor who embraces sector funds (biotech, internet, emerging markets) with a 30-year investment horizon, I just don't see a place for a high yield bond fund.


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Author: rjm1 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 24391 of 75379
Subject: Re: Junk bonds: appropriate for long term invest Date: 8/27/2000 7:49 PM
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I'm in my early 20s, very risk-tolerant, and am looking for a few ultra-aggressive investments for my IRA.

Remember all gains are taxed at regular income tax rates and you get no tax deduction for losses.

Might want to have your high risk investments out side of a tax shelter plan.

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