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Author: schurchill16 Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35387  
Subject: Re: Building a Starter Bond Portfolio Date: 7/26/2009 3:56 PM
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The big question here: is a lazy, fixed income strategy, using indexed bond funds or ETFs to obtain the market average return, a very very smart strategy also?

A key point to note is this.

When you buy bonds, you are buying fixed income instruments. As long as the company doesn't go out of busy you are receiving regular preset coupon (FIXED INCOME) amounts based upon your initial (or aggregate of all purchase) amounts.

When you buy Bond Funds, you are buying shares of a pool of money that has been / will be invested in fixed income instruments, but which will result in a very UNfixed income to you the buyer.

One is not inherently better than the other, but they do behave very differently from one another.


Scott
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