Sunday, May 20, 2012

Perpetual bonds

A long term investor should not worry unduly about a possible fall in the market value of the bonds, so long as the return is higher than the rate of inflation. However, they should look at the credit risk and apply the principle of diversification. Link

1 comment:

  1. Fixed return over perpertual (very very long term) and inflation rate can be higher than the fixed return over some years in this perpertual time horizon.

    Best is to understanding between lending and investing. Putting money in perpertual bonds is lending and lenders fear inflation the most.

    When one has long time horizon, investing is the better option to go.

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