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After Last Year, Is It Still Safe To Invest In Bonds?

Parts of this article were originally published on MakinSenseBabeMost financial advisors are wussies. They’re too afraid to ditch an old
investment playbook that might not work going forward for the same reason we’re too
afraid to ditch an old life script that might not be the best thing for us going forward.
A script is when different parts of your life feel like variations on the same old story.
Living by old scripts is easy, because it’s familiar and therefore
comfortable. Like, if we’re use to dating people we deserve better
than because we’re more afraid of being alone. Or if we’re in a job or career
that we don’t like it’s more comfortable to stay in that job vs. start from
scratch with something that may or may not pan out. Most people choose
what they know and repeat behaviors that they know because the unknown frightens
them. This is why people got sucker-punched with most of their bond fund
investments in 2013. So now financial advisors are standing around scratching their balls
trying to figure out if they need to rewrite the rules when it comes to bond
investing and adapt to the new environment we’re in. Most are choosing not
to. The truth is that it’s time to ditch the old bond investing
playbook, and here’s why. First…What Is A Bond?Imagine you loan
your money to the government for 10 years. And the government pays you 3% in interest
payments per year for 10 years for that loan. You own a 10-year government bond. If you loan your money to a company for 10 years and they pay you 5% interest
every year for 10 years, you own a 10-year corporate bond. If you own a
bond, you gave out a loan and will receive interest in return. Why Did The Value Of Some Government Bonds Decrease By Over 10% In
2013?
Imagine if …read more    

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