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Many Happy Returns

Bond Battle: Individual Bonds or Bond Funds?

May 22, 2024
Exploring the debate between individual government bonds and bond funds, delving into topics like credit risk, diversification, and managing risks. Comparing the advantages and drawbacks of holding individual bonds, emphasizing the benefits of known returns and tax efficiency. Discussing the complexities of reinvesting coupon payments and the trade-offs between active management and passive bond funds.
44:06

Podcast summary created with Snipd AI

Quick takeaways

  • Individual bonds offer tailored strategies and duration management for enhanced returns.
  • Bond funds provide diversification and professional management for efficient bond exposure in portfolios.

Deep dives

Benefits of Holding Bonds in a Portfolio

Bond investments offer stability during market turmoil, providing a grounded foundation to balance equity risk. Bonds move opposite to stocks, offering diversification to calibrate portfolio risk. They are advantageous for known expenses, ensuring funds are available at specified future dates. Different bond types vary in credit risk, determining return and risk balancing.

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