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Author: shawz Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35363  
Subject: Re: Advice on DCAing into Bonds Date: 4/21/2009 3:12 PM
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Wendy wrote; "If you truly believe that interest rates will rise, you believe that long term bond funds' NAV will fall."

Yes, that's correct. So I think it would not be wise to make a big 1-time purchase of a long-term bond fund now. Given that I am limited in this 403(b) account to only purchasing bond funds, I can't buy individual bonds. So, my question deals with using a dollar-cost-average (DCA) approach to buying a bond fund - basically buying a bit each month over the next 8 years. Wouldn't this approach help reduce some of the risk of the NAV falling?

For example; let's say I buy into a bond fund at $1,000 per month. In a month when the NAV is low, I purchase more shares of the fund - when the NAV is high, the $1,000 buys less shares - so over time my cost per share should work out well. It would work that way with a stock fund anyway - I'm wondering if the same holds true for a bond fund?

My thought is that this approach might reduce a lot of the risk of buying a long-term bond fund. Thanks for any thoughts,

Shawz
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