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Reply to "bond funds - explain to me how they will decline with rising interest rates"
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[quote=Anonymous][quote=Anonymous] When you invest in long and intermediate term bond funds you are trading predictability for return.[/quote] There is higher potential for return right now investing in these funds, but they are not predictable. Any money that you will need in the next 2-3 years ought not to there. As far as the G fund goes, it is it's own bird, a thing of magic unmatched in the public sphere. It invests solely in U.S. Treasury securities and it's return is based on the weighted average yield of all outstanding Treasury notes and bonds with 4 or more years to maturity, guaranteed to never lose principal. In short, this delectable little plum of an investment option gives you the return of a long term bond fund with the risk of a short term bond fund. It is the closest thing in this wicked world of ours to a free lunch.[/quote]
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