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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]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] False. Long term bond funds (in a falling interest rate environment) provide increase to PRINCIPLE as well as interest income. The G Fund does not provide any opportunity for increase to principle beyond simple interest. It performs exactly like a money market fund, except the rate of return is tied to trailing Treasury bond rates.[/quote]
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