1.) Reinvestment risk. What if the MM and longer-term bonds are paying 3% down the road? Then you missed-out on locking in 4%-5% rates.I feel like this question is dumb but I'll ask anyway.
1) Why would anyone buy bonds at yields under 8% when you can buy a money market fund from fidelity (fisxx) or vanguard yielding ~ 5.2%. It doesn't seem like the 300 bps is worth the risk of single bond exposure.
2) I have the same question for an etf like BND versus the aforementioned money market funds. BND is yielding 3.3% right now and introduces principle risk via price fluctuation.
2.) I think you have the yield on BND wrong. What you care about is yield to maturity (YTM).
Statistics: Posted by Call_Me_Op — Fri Mar 15, 2024 8:42 am — Replies 2 — Views 329