Do you agree with this sentence I alluded to before that is found in the Wiki: "You want your risks on the equity side, not the bond side."?The risk to bond funds of interest rate changes is very well known: duration x interest rate increase = bond fund decrease. (And vice-versa for interest rate decreases)Stocks and Total Bond are both risky assets. Stocks provide a higher level of return over time for taking that risk. Total Bond return is so low its risk isn't worth it for me. As long as Bogleheads make clear that Total Bond is risky, and the Wiki does not, I'm fine with that. Risky as in double digit drops in value risky, not just a few percent as is commonly assumed.
Fixed income is an incorrect descriptor of bond funds and should not be used to reference them. Neither their value nor their payments are fixed.
Stocks may have had higher return over bonds in the past, but not over every time period, and there is no guarantee that stocks will outperform bonds in any particular period in the future.
And there is no other fixed income investment that is guaranteed to outperform Total Bond in the future.
Bond funds are collections of fixed income investments that provide diversification, and as such, they are an investment in fixed income. Likewise, stock funds are collections of individual stock shares that provide diversification, and as such, are an investment in equities.
This wiki page has quite a bit of discussion of bond fund risks:
https://www.bogleheads.org/wiki/Individ ... _bond_fund
I'm assuming not as we're all agreed now that bond funds are risky. Perhaps the Wiki writers don't belong to your "very well known" group.
Statistics: Posted by GreenLawn — Tue Dec 10, 2024 8:05 am — Replies 171 — Views 10791
