Should I Own Bond Funds Now?
Why do you own a bond fund? If you are like most folks that I talk with, it is because they are looking for some safety with their investments. After all, bonds are much safer than stocks, aren’t they? The only true answer to that question is; it depends! Safety in the bond market depends on how you own your bonds and what kind of bonds you own. The element that creates the perception of safety is the guarantee included in a bond. What most folks forget is the Guarantee on a bond‘s principal is only for one day! That is the day the bond matures. Until that day, the only thing guaranteed is the interest payment. The value of the actual bond will go up and down every day. For today’s discussion I am going to look specifically at bond mutual funds.