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Wendy, what do you think of these:

Essentially an ETF bond ladder>

Bonds and bond funds are two different animals.

Barring default, a bond can be held to maturity for return of principal even if interest rates rise.

A bond fund is made up of many bonds which are ususally traded by the manager. The investor buys shares at the Net Asset Value (NAV) which is the sum of the value of all the bonds. If interest rates rise the NAV of all the bonds held by the fund will fall. The fund never reaches maturity. Because of this, the investor may never have return of principal. Because the fund is constantly rolling over maturing bonds, the NAV may eventually reach the original value at the duration of the fund. That is, if the average duration of the bonds in the fund is 5 years they will be replaced by that time.

The safest bond is an FDIC-insured bank Certificate of Deposit. These are only available to individual investors, not to institutional investors.

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