Bonds Aren't Boring...5% to 8% Annualised Returns, Here We Go!
A recent conversation with a fellow colleague in the staff pantry inspired this article. "Hey bro, I'm telling you bond index funds are the worst instrument to hold. I am down more than 10% even though I'm on a monthly regular savings plan (RSP) to purchase a local bond index fund with one of our local banks!" he lamented. Nodding on, I replied, "Hmmm, don't worry, when interest rates eventually start to come down, the price of your index fund will rise back up. But for now, you would do well sticking it out if the fundamentals of your bond index fund is doing all right." He look back at me blankly and asked "What do you mean? Bond index funds have fundamentals too?" Sighing, I gave him a pat on his back, "Yes bro, let me take you through this and also how one can achieve a reliable annualised returns from a seemingly low risk instrument like a bond index fund." So yes, the title of my latest article isn't clickbait. Neither is it...