A Note About Bonds

A Note About Bonds


The Editor is also the Founder of The Passive Investor website. He is a part-time practising General Practitioner (GP) with an interest in all financial and investment-related topics. He is particularly focused on the integrated use of residential property, commercial property and the sharemarket to develop effective financial strategies for wealth accumulation and distribution.

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As you may have noticed, we haven’t written a lot about bonds!

It’s not that we don’t like bonds, we do – bonds are good for diversification and as a counter-cyclical asset to shares (ie. bonds tend to do well when shares don’t), and to reduce risk and improve risk-adjusted returns.

That being said, we feel that most people should be able to adequately meet most of their long-term income needs with a combination of shares, commercial property, residential property and cash (ie. online savings accounts and term deposits), and with a relatively smaller allocation to bonds.

And while as you get older and your appetite for risk decreases it may be prudent to have a higher proportion of your total portfolio in bonds, you need to consider this allocation in the context of your expected life expectancy, as over very long periods of time the income received from holding a lot of bonds may not keep up that well with inflation.

As such, in our website and blog we are going to concentrate a lot more on discussing shares, commercial property and residential property, but will make occasional blog posts about bonds such as analysing the pros and cons of specific bond offerings that may come up from time to time.

For those who are interested in learning more about bonds, our members-only How to Invest in Bonds section will give you a detailed and step-by-step guide on how to rapidly get yourself educated and stay up-to-date on this particular asset class using the best free and online resources available.

This section also includes some guidance on learning about hybrids as well.

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